Owners of properties worth more than £2 million will be hit by a new “mansion tax” that will net the government £400 million a year, today’s Budget leaks have confirmed.

The levy will take the form of council tax surcharge from April 2028, on homes that are identified as worth more than £2m by the Valuation Office, based on 2026 prices.

Unlike standard council tax, the revenue from this extra charge will go to central government.

There will be four price bands, with the charge increasing from £2,500 for a property valued between £2-£2.5m, to £7,500 for a property valued in the highest band of £5m or more.

The charges will go up each year in line with the Consumer Prices Index. 

Evelyn Partners partner in financial planning David Little says: “Owners of properties valued between £1.5mi and £2m will be breathing a sigh of relief that they have swerved this so-called mansion tax. 

“Doubtless the Treasury realised that at £1.5million there would be a significant backlash from Labour voters with such properties in more affluent parts of the country, especially the South East of England.

“Now it seems the burden will fall on those with the highest-valued properties, many of which will be in London.

“But with the measure not expected to come in until 2028, there is plenty of time for the law of unintended consequences to take effect.

“There could be widespread implications for the property market in the South East of England, where transactions could surge before the surcharge kicks in and sellers try to price properties below the threshold.”

More to follow…