Rachel Reeves is said to be planning the introduction of a new council tax surcharge targeting homes valued at more than £2 million as part of the upcoming Budget. The proposed surcharge, often referred to as a “mansion tax,” is expected to affect over 100,000 high-value properties.
Initially, there were reports that the Chancellor aimed to set the threshold at £1.5 million, impacting around 300,000 households. However, it has been raised to £2 million to prevent imposing financial strain on families deemed “asset-rich, cash poor.”
In England, council tax is categorized into different bands based on property valuations from April 1991. The Chancellor is reportedly considering revaluing the most expensive Band F, G, and H homes, affecting approximately 2.4 million properties to determine the levy applicability.
According to The Times, individuals may have the option to defer payment until they sell their property or pass away. The Treasury has refrained from commenting on any Budget-related speculations.
Council tax bands in England are established according to property values from April 1991. The average Band D council tax for the 2025-2026 fiscal year in England is £2,280, with Scotland and Wales having their own banding systems.
Currently, the government is seeking feedback on proposals to extend council tax payment periods from ten to twelve months. While households can choose to continue with ten-month payments, the default system might switch to a twelve-month installment plan. This adjustment could save an average Band D household around £38 monthly, as per data from the Ministry of Housing, Communities, and Local Government.
Furthermore, the consultation also suggests a more lenient debt collection process for individuals missing council tax payments. Residents are advised to inquire about potential council tax discounts they may qualify for based on their circumstances, such as living alone or low-income status. Additionally, those receiving benefits might be eligible for Council Tax Support or Reduction schemes, potentially entitling them to full bill exemption.
Lastly, individuals are encouraged to review their council tax bands to ensure accuracy. Challenging an incorrectly high band could result in refunds and reduced future bills, although challenging a band deemed too low may lead to increased future tax liabilities.