Rachel Reeves is said to be considering the implementation of a new council tax surcharge on properties valued over £2 million as part of the Budget plan. This proposed “mansion tax” is expected to affect over 100,000 of the most expensive residences.
Initially, there were reports that the Chancellor aimed to set the threshold at £1.5 million, impacting 300,000 households. However, the threshold has allegedly been raised to £2 million to prevent undue burden on families considered “asset-rich, cash poor.”
In England, council tax is categorized into bands according to property values from April 1991. The Chancellor is reportedly contemplating revaluing the most costly band F, G, and H properties, totaling 2.4 million, to identify those subject to the surcharge.
According to The Times, individuals may defer payment of the tax until they relocate or pass away. The Treasury has not provided any official statements regarding the Budget speculation.
Council tax bands in England are determined based on property values from 1991. The average annual Band D council tax for the 2025-2026 financial year in England is £2,280. Scotland and Wales have their own council tax banding system.
The government is currently seeking feedback on proposals to extend council tax payments over 12 months instead of the current ten months. Under the new plan, 12 monthly payments will become the default option, allowing for smaller monthly payments.
Households can still opt to pay their council tax bill over ten months if preferred. Additionally, the consultation suggests a more lenient approach to debt collection for missed council tax payments.
Residents should inquire with their local council about potential council tax discounts. For instance, individuals living alone are eligible for a 25% reduction in their council tax bill, while households with all members exempt from council tax can receive a 50% discount.
Those receiving benefits or with low incomes should check if their local authority offers Council Tax Support or Reduction schemes, which may entitle them to a complete waiver of their council tax bill in certain cases.
Furthermore, homeowners should explore the possibility of challenging their council tax band. If in a higher band than justified, they could be owed significant refunds and lower future bills. Conversely, moving to a lower band could lead to increased future payments, so thorough research is essential.
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