Buyers of homes priced just above £2 million are already negotiating as though the High Value Council Tax Surcharge were in force. It does not take effect until April 2028, but research since it was announced shows offers clustering below the threshold, and owners of homes between about £1.8 million and £2.5 million should understand why before they settle on an asking price.
The surcharge was announced in the Budget of 26 November 2025. The next Budget is on 28 October, and owners will be watching for any change to its design. This piece sets out the position as it stands today.
What has been confirmed
HM Treasury's policy paper sets four annual charges, payable on top of ordinary council tax: £2,500 for homes worth £2 million to £2.5 million, £3,500 from £2.5 million to £3.5 million, £5,000 from £3.5 million to £5 million, and £7,500 at £5 million and above. The surcharge applies in England from April 2028, is paid by the owner rather than the occupier, and rises with CPI inflation each year from 2029-30. The threshold refers to homes worth £2 million or more in 2026, and values are to be reassessed every five years. The Treasury expects it to raise around £430 million a year.
The Valuation Office Agency is carrying out its own valuation exercise for the surcharge, separate from existing council tax bands. According to LonRes's guide to the process, published on 27 August, the VOA will combine automated valuation models with valuer judgement, and HMRC has said that most homes will be valued without a visit.
London will carry much of the cost. The London Borough of Richmond upon Thames said on 6 August that owners in Richmond, Kensington and Chelsea, Westminster and Wandsworth could pay around £275 million between them, more than half of what the policy is expected to raise nationally.
What is still to be decided
The government's consultation on design and delivery ran from 19 May to 14 July 2026, and no response has yet been published. It covered a deferral scheme for owners who cannot pay, billing, appeals to the Valuation Tribunal, exemptions, and whether to charge an extra premium to owners who are not UK resident. The Local Government Association's briefing on the consultation, dated 17 July, records that liability would generally fall on the legal owner, on the leaseholder where a lease was granted for more than 21 years, and on trustees for property held in trust, and that a deferral would end on a change of ownership by default.
Until the response is published, none of these points should be treated as final. There has been press speculation about a lower threshold; nothing has been announced, and we do not plan around speculation.
What the market is already doing
The clearest evidence so far comes from Hamptons. In research published in February 2026, it found that for homes priced within 10% of £2 million, 83% of offers kept the price below the threshold, against 64% a year earlier. Around £1 million, where no surcharge applies, buyer behaviour did not change, which suggests the shift reflects the surcharge rather than the wider market. Listings priced between £1.8 million and £2 million rose 5.6% year on year in the two months after the Budget, while those between £2 million and £2.2 million fell 6.5%. Listings above £5 million, the top band, fell 7%.
All of this sits in a market where buyers already negotiate hard. LonRes's figures for July to September, published on 6 October, show average achieved prices per square foot down 6.5% on the year in prime central London and 9.6% across prime London, with the average discount to the initial asking price reaching 12.6% in prime central London. Knight Frank, whose index tracks valuations rather than achieved prices, recorded a 0.3% quarterly rise in prime central London over the same period. The two measure different things; both describe buyers with choice.
What this means for an owner near the line
The annual sum is modest against the value of the homes it affects, but buyers treat thresholds as psychological as well as financial, as stamp duty bands have shown for years. A few points follow from the evidence rather than from opinion.
- A home marketed just above £2 million competes with homes just below it that buyers expect to sit outside the charge. Its price has to be justified against that comparable evidence, street by street, rather than against a round number.
- The band is meant to reflect the VOA's view of value in 2026, not a later asking price. LonRes reports that the consultation would treat agents' and portals' estimates as inadmissible in a challenge, so achieved prices are the evidence that counts.
- The same logic applies at £2.5 million, £3.5 million and £5 million, though Hamptons' figures suggest the effect is clearest at the £2 million entry point and at the top band.
None of this is tax advice, and the Budget on 28 October may change parts of the picture. What is unlikely to change quickly is the behaviour of buyers, who are already pricing the thresholds in. If you own a home near one of them and are thinking of selling in the next year, it helps to know where it sits on the recent sales evidence before you launch.
Dolce Vita handles sales and lettings across the UK from Mayfair, and helps clients buy abroad through partner agencies. For a view on where your home sits against recent sales, Request a valuation; we acknowledge the same working day and return a written valuation within 24 to 48 hours.
Chris Dawson, Co-Founder
Sources: HM Treasury, "High Value Council Tax Surcharge" policy paper (gov.uk, 26 November 2025). MHCLG, "High Value Council Tax Surcharge: design and delivery" consultation, 19 May to 14 July 2026. Local Government Association, briefing on the consultation, 17 July 2026. LonRes, "Mansion tax valuation: the agent's guide", 27 August 2026. London Borough of Richmond upon Thames, news release, 6 August 2026. Hamptons, "Mansion Tax begins to influence pricing", February 2026. LonRes, "London property sales: summer 2026 standouts", 6 October 2026. Knight Frank prime London figures to September 2026, published 5 October 2026 (via Property Industry Eye, 5 October 2026).