Chancellor John Healey has ruled out cutting the entry point for England’s new High Value Council Tax Surcharge — commonly called the “mansion tax” — from £2 million to £1.5 million in this month’s Budget, according to the Financial Times. The decision means the surcharge, due to take effect in April 2028, will still apply only to homes valued at £2 million or more, not the much larger group of properties that a lower threshold would have caught.
The surcharge itself was announced by then-chancellor Rachel Reeves in the November 2025 Budget. From April 2028, owners of English homes valued above £2 million will pay a new annual charge on top of their existing council tax, starting at £2,500 for properties just over £2 million and rising to £7,500 for homes worth more than £5 million. The Office for Budget Responsibility estimates it will hit fewer than 1 per cent of UK properties and raise roughly £400 million a year by 2029-30. Collecting it requires the first revaluation of England’s top three council tax bands — F, G and H — since 1991.
Reeves herself had considered setting the threshold at £1.5 million but held back after push-back from Labour MPs in London and the South East. The idea resurfaced ahead of this month’s Budget — first reported by The Times — and the Treasury had declined to comment on what it called “speculation.” The Financial Times reports that Healey has now concluded that changing the rules would undermine public support for the levy, after many Labour MPs warned a lower threshold would be “electoral suicide” in central London constituencies where property prices have risen sharply. Research group Tax Policy Associates estimated that cutting the threshold to £1.5 million would have roughly doubled the number of liable properties, from about 127,000 to 243,000; estate agent Hamptons separately put the number of homes priced between £1.5 million and £2 million at around 145,000, on top of about 130,000 already above £2 million.
For owners of UK property valued at £2 million or more — a group that includes overseas buyers of higher-value London and South East homes — nothing changes: the surcharge still arrives from April 2028 on the schedule and bands Reeves set out last year. Homeowners will be able to roll up the annual charge and defer payment until they sell or die, rather than pay it year by year. For owners in the £1.5 million-to-£2 million band, the practical effect of Tuesday’s decision is that they stay outside the surcharge altogether, for now — a lower threshold would have pulled in many more ordinary, higher-priced family homes concentrated in London and south-east England rather than only the very top of the market. Hamptons’ Aneisha Beveridge said ruling out the £1.5 million threshold “should provide some welcome certainty for homeowners and those looking to buy higher-value homes,” noting that at that level “the tax starts to look less like a charge on the wealthiest households and more like a tax that affects a much broader group of homeowners, particularly in southern England.” The Treasury has not ruled out other tax changes in the October 28 Budget — the Financial Times separately reports Healey has also rejected equalising capital gains tax with income tax rates, a distinct decision affecting property sellers rather than owners of £2 million-plus homes.
References
Financial Times – John Healey rules out cutting ‘mansion tax’ threshold to £1.5mn in UK Budget / This Is Money – Budget plans to hit £1.5million-plus homes with Mansion Tax shelved and buy-to-let landlords may dodge raid on profits too: Here’s what it means / GOV.UK / HM Treasury – High Value Council Tax Surcharge
