The £2m 'Mansion Tax': The High Value Council Tax Surcharge, and How Scotland Differs
England is consulting on a High Value Council Tax Surcharge on homes worth £2m and above, from April 2028. Scotland is proposing its own version with a lower £1m threshold and a different mechanism. What owners, including non-residents, should understand now.
A new charge on high-value homes is moving from idea to detail. The government is consulting on a High Value Council Tax Surcharge in England, an annual charge on residential properties worth £2m and above that the press has already labelled a "mansion tax". Scotland is proposing its own version, and the two are not the same. For anyone who owns a valuable UK home, or advises a family that does, it is worth understanding what is proposed, who would pay, and why the Scottish design matters if your property is north of the border.
A word of caution before the detail: these are consultations, not settled law. The thresholds, charges and dates below are what the governments have proposed, and they may change before anything takes effect.
What is proposed in England
The surcharge would apply to homes valued at £2m or more, an estimated 1% of properties, and would sit on top of existing council tax rather than replacing it. Rather than valuing each property individually, the proposal places homes into four bands, each with a flat annual charge:
| Property value | Proposed annual surcharge |
|---|---|
| £2m to £2.5m | £2,500 |
| £2.5m to £3.5m | £3,500 |
| £3.5m to £5m | £5,000 |
| Over £5m | £7,500 |
The stated aim is to address a long-standing quirk of the council tax system, in which some of the most valuable homes in central London pay less in council tax than an average family home elsewhere in the country. The measure is expected to raise around £430m a year.
Who would actually pay
This is where careful thought is needed, because liability does not always fall where people expect.
| Situation | Where liability would fall |
|---|---|
| Owner-occupied or let | On the legal owner, identified through Land Registry data, rather than the occupier, and on the legal owner rather than the beneficial owner. Where those differ, it is for the parties to settle between themselves. |
| Held in trust (including bare trusts) | Property in trust would be within scope, and where there is more than one trustee they would be jointly and severally liable. |
| Long leasehold | With the leaseholder where the lease was originally granted for more than 21 years (including leases for life), and otherwise with the freeholder. |
| Single occupancy | No single-person discount, unlike ordinary council tax. |
There would be exemptions, including halls of residence, care homes and refuges, and the government is considering discounted treatment for certain agricultural "tied" property and for property held for charitable purposes.
Timing, deferral and challenges
The Valuation Office would publish a draft list of in-scope properties in late 2027, with the first bills sent to owners in March 2028 and monthly payment the default from April 2028. Recognising that not everyone with a valuable home has ready cash, a deferral scheme is proposed, allowing payment to be delayed until the property is sold, with interest running in the meantime. Eligibility would be assessed against national criteria, one option being an income limit of around £35,000 and capital below £16,000, and the scheme would not be open to second-home owners or to companies. There would be an initial eight-month window to challenge a decision, reducing to six months thereafter, with revaluations every five years.
How Scotland differs
Council tax is devolved, so Scotland is designing its own approach, and it is meaningfully different from England's. The Scottish proposal does not add a separate surcharge on top of council tax. Instead it creates two new council tax bands for high-value homes, charged as a multiplier of the local Band D rate:
- Band I for homes valued between £1m and £2m, and
- Band J for homes valued over £2m.
Two differences stand out. First, the threshold is lower: Scotland's charge would begin at £1m, not £2m, bringing more homes into scope. Second, the mechanism is different: because the Scottish charge is a multiplier of the Band D rate rather than a fixed national figure, the amount would vary by council area and would be proportionate to local council tax, rather than a flat sum set in Westminster. The illustrative multipliers under discussion are higher for the top band, though the Scottish Government has not confirmed the final figures.
| England | Scotland | |
|---|---|---|
| Threshold | £2m and above | £1m and above (Band I) |
| Mechanism | Flat annual surcharge on top of council tax | Two new council tax bands (I and J) |
| How the charge is set | Fixed national amount by band (£2,500 to £7,500) | A multiplier of the local Band D rate |
| Homes in scope | Around 1% (roughly 165,000) | Fewer than 1% (around 15,000) |
| Intended start | April 2028 | April 2028 |
| Consultation closes | 14 July 2026 | 24 August 2026 |
Wales is expected to consider a similar measure in due course. The practical point is that the same £1.5m home would be treated very differently depending on whether it sits in England or Scotland, and a UK-wide family with property in more than one nation cannot assume the rules travel with them.
The cross-border angle
For internationally mobile owners there is a further point to watch. The English consultation flags that the government is considering an additional premium for non-UK resident owners of homes within the charge. Nothing is settled, but the direction of travel is clear, and it sits alongside the other property-specific rules that already fall more heavily on non-residents, from the capital gains regime on UK residential property to the additional rates of stamp duty. If you own a valuable UK home from overseas, this is a space to watch closely.
It is also a reminder that a high-value UK property rarely sits in isolation from the rest of a cross-border position. How the home is owned, personally, through a company, or in trust, affects not only this proposed surcharge but inheritance tax, capital gains tax and the annual charge on enveloped dwellings. Decisions taken for one of those taxes can have consequences for the others.
What to do now
There is no need to act on a consultation, but there is value in being ready:
- Establish whether your property is likely to be within scope, in England or in Scotland, and under which band.
- Understand who would be liable given how the property is owned, particularly where a trust, a company or a long lease is involved.
- For non-residents, keep the possible non-resident premium in view when planning around a UK home.
- Where the position is finely balanced, look at the ownership structure as a whole, across this charge and the other property taxes, rather than in isolation.
How we can help
At Expat UK Tax we specialise in UK tax for individuals and families who live, work and invest across borders, including those who hold UK property from overseas. We can assess how the proposed surcharge would apply to your home, how your ownership structure affects it, and how it interacts with your wider UK tax position. If you own, or are considering buying, a high-value UK property, please get in touch and we will help you plan ahead with confidence.
