Rachel Reeves is said to be preparing to introduce a new council tax surcharge on homes valued above £2 million as part of her upcoming Budget. This proposed “mansion tax” is expected to impact over 100,000 of the most expensive properties.
Initially, the Chancellor had considered setting the threshold at £1.5 million, affecting around 300,000 households. However, the threshold has reportedly been raised to £2 million to prevent putting undue financial strain on “asset-rich, cash poor” families.
In England, council tax is categorized into bands determined by property values from April 1991. It is reported that the Chancellor intends to reassess the most expensive Band F, G, and H properties, affecting approximately 2.4 million homes to identify those subject to the surcharge.
According to The Times, individuals may defer payment of the tax until they relocate or pass away. The Treasury has refrained from commenting on any Budget-related speculations.
The average council tax for a Band D property in England is £2,280 for the financial year 2025-2026. Scotland and Wales have their own distinct council tax band structures.
The government is presently seeking input on proposals to extend council tax payments over 12 months instead of the current ten-month schedule. This change, if implemented, would become the default payment plan, offering smaller monthly installments for households.
Households will retain the option to stick with the ten-month payment schedule. The consultation also suggests a more lenient approach to debt collection in cases of missed council tax payments.
Residents are advised to inquire with their local council about potential council tax discounts based on eligibility criteria. Those living alone may receive a 25% reduction, while households exempt from council tax payments could benefit from a 50% discount.
Individuals receiving benefits or with low incomes should explore Council Tax Support schemes provided by local authorities, which could result in significant reductions, including possible full exemption from council tax payments.
Lastly, homeowners are encouraged to assess their council tax band for potential adjustments. Challenging a high band could lead to refunds and reduced future bills, but caution is advised as contesting a low band may result in increased future payments.