The Government has confirmed plans to introduce a High Value Council Tax Surcharge on properties valued at £2 million or more, with bills set to commence from March 2028.
Chancellor John Healey’s Autumn Budget outlined details of the tax structure, including exemptions and deferral schemes. A consultation response published on 28 October revealed the framework for implementation, though an appeals process remains under development.
Deferrals and exemptions
Households with annual income of £35,000 or less, capital savings below £16,000, or properties serving as the main home for disabled or severely mentally impaired residents will be eligible for deferrals. Payment can be postponed until ownership changes or earlier if the taxpayer opts to settle their liability. The Government will set out further details on interest rates in forthcoming regulations.
Exemptions will apply to purpose-built student halls of residence, care homes, long-stay hospital accommodation, hospices, and Ministry of Defence barracks. Properties owned by sovereign nations for diplomatic purposes and accommodation for those fleeing domestic violence will also be exempt. Discounts will be provided for farmhouses on working farms and properties owned for charitable purposes.
Enforcement measures
The Government has outlined penalties for non-compliance with valuation information requests. Property owners who fail to provide required information within 21 days face a penalty of 10% of annual liability, rising to 30% if not provided after a further 21 days. Local authorities will be permitted to contact residents, managing agents or others to identify property owners, though no penalties are proposed for non-cooperation from these third parties.
Earlier speculation that the threshold might be lowered to £1.5 million did not materialise. The market had been awaiting clarity on this measure ahead of the Autumn Budget announcement.
Market impact
Nigel Bishop of buying agency Recoco Property Search commented on the decision to maintain the £2 million threshold: “The tax will result in buyers thinking twice before putting in an offer on properties near or over the £2million mark, resulting in properties sitting on the market for longer.”
Bishop added that the measure could create oversupply at higher price points and prevent homeowners from progressing with plans such as downsizing. The announcement comes at a time when the property market faces multiple headwinds, with buy-to-let losses having risen significantly in recent months.
The surcharge represents a new layer of taxation on high-value residential property in the UK, with implementation details to be finalised over the next 16 months before bills begin landing in March 2028.
