Rachel Reeves is said to be considering the implementation of a new council tax surcharge targeting homes valued over £2 million as part of the upcoming Budget. This proposal, known as a “mansion tax,” is expected to affect over 100,000 high-end properties.
Initially, there were reports that the Chancellor was aiming for a £1.5 million threshold, affecting around 300,000 households. However, it has been suggested that Reeves has raised the threshold to £2 million to prevent placing undue financial strain on families considered “asset-rich, cash poor.”
In England, council tax is categorized into bands, determined by property values from April 1991. The plan involves revaluing the most expensive band F, G, and H homes, totaling 2.4 million, to identify those subject to the surcharge.
According to The Times, individuals may have the option to defer payment of the tax until they sell their property or pass away. The Treasury has not officially addressed any Budget-related speculations.
Council tax in England is divided into bands based on property values from April 1991. The average Band D council tax for the financial year 2025-2026 in England is £2,280. Scotland and Wales have their own council tax banding systems.
The government is currently seeking feedback on proposals to extend council tax payment periods from ten to twelve months. Under the new plans, payments spread over twelve months will be the default option, potentially reducing the monthly amount paid by the average Band D household by about £38.
Households will retain the choice to pay their council tax over ten months if they prefer. Additionally, the consultation includes suggestions to slow down the debt recovery process for missed council tax payments.
Residents are advised to inquire with their local council about potential council tax discounts. For instance, individuals living alone may qualify for a 25% reduction, while households with all members exempt from council tax could receive a 50% discount.
Those receiving benefits or with low incomes should explore Council Tax Support or Reduction schemes offered by local authorities, which may lead to significant reductions in their council tax bills, possibly up to 100%.
Lastly, homeowners are encouraged to review their council tax banding to ensure it is accurate. If placed in a higher band than warranted, they could be entitled to refunds and lower future bills. Conversely, being in a lower band may result in increased future payments, making thorough research crucial before challenging the banding.
