Homeowners with properties valued around £1.5 million have been warned they could still be caught by Chancellor Rachel Reeves' new 'high-value council tax surcharge', despite the official threshold being set at £2 million.
Valuation Office to Cast Wider Net
Jonathan Russell, chief executive of the Valuation Office Agency, told MPs on Tuesday that his organisation would likely examine homes with an 'indicative value' of £1.5 million and upwards to ensure none are missed. The surcharge, announced in the November Budget, is due to start in April 2028 and will apply to properties in England.
Mr Russell explained to the House of Commons Treasury Committee that while the new bands officially start at £2 million, a proactive review was necessary for accuracy. "We'll probably look at houses that have an indicative value of £1.5 million just to make sure we're not missing anything," he stated.
How the New 'Mansion Tax' Will Work
The levy will create four new price bands on top of existing council tax bills:
- £2,500 per year for properties worth over £2 million.
- The charge rises with property value.
- It peaks at £7,500 annually for homes valued above £5 million.
The Chancellor's policy is expected to affect between 150,000 and 200,000 properties. Homeowners in London and the South East are predicted to be hardest hit, given the concentration of high-value housing in those regions.
Mr Russell outlined the standard valuation process, which considers location, bedroom count, size, and property type (detached, semi-detached, etc.). However, he could not confirm if certain institutions like convents or retirement homes would be exempt, noting "that's still to be worked through."
Political Backlash and Wider Concerns
The revelation that the net may be cast wider than the stated £2 million threshold prompted immediate criticism from the Conservative Party. Sir James Cleverly, the shadow housing secretary, said: "Exactly as we predicted, Labour's new family homes tax is expanding in scope to encompass more and more homes."
He argued that "ordinary families will wake up to find their homes classed as 'mansions'" and face a significant new financial burden. The Tories also highlighted broader council tax increases, claiming the average family in a Band D home faces a cumulative £1,143 rise over this parliament.
The Valuation Office currently handles around 400,000 council tax valuations annually due to property changes. With the new surcharge, its focus will intensify on properties between the £1.5 million and £5 million marks to finalise the correct banding.
