Rachel Reeves is said to be preparing to introduce a new council tax surcharge on properties valued above £2 million as part of her upcoming Budget plan. This proposal, known as a “mansion tax,” is expected to affect over 100,000 of the most expensive homes.
Initially, it was reported that the Chancellor was considering a threshold of £1.5 million, impacting 300,000 households. However, Reeves has allegedly raised the threshold to £2 million to prevent putting pressure on families with valuable assets but limited cash resources.
The reevaluation of 2.4 million high-value band F, G, and H homes in England will determine which properties fall under the new charge based on their April 1991 worth. Individuals may have the option to defer paying the tax until they sell their property or pass away, as per reports from The Times. The Treasury has refrained from commenting on any Budget-related speculations.
Council tax in England is categorized into bands according to property values from April 1991. The average Band D council tax for the 2025-2026 financial year in England stands at £2,280, with variations in Scotland and Wales. The government is currently seeking feedback on a proposal to extend council tax payments over 12 months, shifting from the existing ten-month payment plan.
Under the new plan, households could potentially save around £38 monthly by spreading payments over 12 months, as per data from the Ministry of Housing, Communities and Local Government. Despite the proposed change, individuals will still have the option to pay their council tax bill over ten months. Moreover, the consultation is contemplating a more lenient debt collection process for individuals missing council tax payments.
Residents are advised to inquire with their local council about potential council tax discounts they may be eligible for. Individuals living alone can receive a 25% reduction, while households where everyone is exempt from paying council tax can get a 50% discount. Additionally, those receiving benefits or having a low income should explore Council Tax Support or Council Tax Reduction schemes offered by local authorities, which could lead to significant bill reductions or complete exemption.
Furthermore, homeowners should consider challenging their council tax banding if they suspect it is too high, potentially resulting in refunds and lower future bills. However, it is crucial to conduct thorough research beforehand, as contesting a banding that is too low could lead to increased future payments.