{"id":116198,"date":"2025-12-26T14:00:00","date_gmt":"2025-12-26T14:00:00","guid":{"rendered":"https:\/\/en.econostrum.info\/uk\/?p=116198"},"modified":"2025-12-26T13:55:45","modified_gmt":"2025-12-26T13:55:45","slug":"council-tax-change-new-rule-cost-thousands","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/uk\/council-tax-change-new-rule-cost-thousands\/","title":{"rendered":"Council Tax Change: The New Rule That Could Cost You Thousands"},"content":{"rendered":"\n

The Labour government has unveiled plans to introduce a new High Value Council Tax Surcharge (<\/em>HVCTS<\/em><\/strong>)<\/em>, targeting owners of high-end residential properties. The measure, scheduled to take effect from April 2028, applies exclusively to property owners, not tenants, and marks a significant shift in how the upper tier of the housing market will be taxed.<\/p>\n\n\n\n

Announced by the Valuation Office Agency<\/em>, the surcharge will apply to properties in England worth \u00a32 million<\/strong> or more, with valuations to be conducted independently of the existing 1991-based council tax band system. This targeted approach aims to capture current property values more accurately, amid growing pressure to increase public revenue without affecting the broader population.<\/p>\n\n\n\n

Four New Surcharge Bands Introduced for High-Value Homes<\/strong><\/h2>\n\n\n\n

Under the upcoming HVCTS framework, residential properties valued over \u00a32 million will fall into one of four new surcharge bands. According to the Valuation Office Agency<\/em>, the annual charge will start at \u00a32,500<\/strong> for properties just above the threshold and will reach \u00a37,500 for homes valued above \u00a35 million<\/strong>. The surcharge will be collected in addition to existing council tax bills but will not be influenced by the property\u2019s current council tax band.<\/p>\n\n\n\n

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The agency stated, \u201cThe surcharge will not be determined by current Council Tax bands, which are based on property values from 1991<\/em>… Council tax bands will not be used to determine eligibility for the surcharge and will have no bearing on a property\u2019s HVCTS band<\/em>.\u201d Instead, a dedicated valuation process will be carried out in 2026 to assess which homes qualify, and each will be allocated a band accordingly.<\/p>\n<\/blockquote>\n\n\n\n

This separate valuation is expected to affect only a small proportion of properties, though exact figures on how many households <\/a><\/strong>will be impacted have not been released. The Government maintains that the move is designed to ensure the wealthiest property owners contribute more, while leaving the majority of households unaffected.<\/p>\n\n\n\n

Market Responds Cautiously as Budget Effects Begin to Settle<\/strong><\/h2>\n\n\n\n

The housing market has shown mixed responses following the Budget announcement and confirmation of the new property surcharge. According to Birmingham Live<\/em>, HMRC reported around 98,450<\/strong> home sales across the UK in October 2025, representing a 2% year-on-year decrease but a modest 2% increase from the previous month.<\/p>\n\n\n\n

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Estate agents anticipate a potential surge in transactions for properties valued just below the \u00a32 million threshold, as sellers and buyers adapt to the new tax environment. Nick Leeming<\/strong>, chairman of estate agency Jackson-Stops<\/a><\/em>, noted: \u201cIt is likely we will see more stock come to the market in the short-term, with minor price adjustments for properties just over the \u00a32 million cliff edge<\/em>.\u201d<\/p>\n<\/blockquote>\n\n\n\n

He also suggested that this could lead to increased pressure on mid-tier markets, particularly in the South East, as buyers shift their focus to avoid the additional charge. Sarah Coles<\/strong>, head of personal finance at Hargreaves Lansdown<\/em>, added that the surcharge, informally labelled a \u201cmansion tax\u201d, may influence high-end property decisions, though she believes the overall impact will remain limited. According to her, \u201cThe fact that the Budget didn\u2019t deliver a major blow for buyers should help support sales in the coming months<\/em>.\u201d<\/p>\n\n\n\n

Elsewhere, estate agency Jeremy Leaf<\/em> in north London suggested that improving affordability and the likelihood of a base rate cut could offset any dampening effect caused by the surcharge. A spokesperson remarked, \u201cWith the Budget out of the way… the impact on housing market activity should be minimal at worst<\/em>.\u201d<\/p>\n\n\n\n

As the sector digests the upcoming policy change, attention now turns to how valuations will be conducted and how property owners, particularly those near the \u00a32 million mark, will navigate the revised landscape.<\/p>\n","protected":false},"excerpt":{"rendered":"

Property owners in England with homes valued above \u00a32 million will face additional charges from 2028. The new bands, unrelated to current council tax valuations, could cost some households up to \u00a37,500 per year.<\/p>\n","protected":false},"author":10,"featured_media":116200,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[],"class_list":["post-116198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxation","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33","no-featured-image-padding"],"_links":{"self":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/116198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/comments?post=116198"}],"version-history":[{"count":2,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/116198\/revisions"}],"predecessor-version":[{"id":116206,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/116198\/revisions\/116206"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media\/116200"}],"wp:attachment":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media?parent=116198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/categories?post=116198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/tags?post=116198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}