Rachel Reeves is said to be considering the introduction of a new council tax surcharge on properties valued above £2 million as part of the upcoming Budget. This proposed surcharge, often referred to as a “mansion tax,” is projected to affect over 100,000 high-end homes.
Originally, there were reports that the Chancellor aimed to set the threshold at £1.5 million, impacting around 300,000 households. However, it is now speculated that the threshold has been raised to £2 million to prevent placing undue financial burden on families who may be asset-rich but cash poor.
In England, council tax is categorized into bands based on property values from April 1991. It is anticipated that the Chancellor will reassess approximately 2.4 million of the most valuable Band F, G, and H properties to determine the levy applicability.
According to The Times, individuals may have the option to defer payment of the tax until they move or pass away. The Treasury has refrained from commenting on any Budget-related speculations.
For the financial year 2025-2026, the average council tax for Band D properties in England stands at £2,280. Scotland and Wales have differing council tax band structures.
The government is presently seeking feedback on a proposal to extend council tax payments to a 12-month period instead of the current ten-month schedule. This change would result in smaller monthly payments for households. Nonetheless, households will still retain the option to adhere to the ten-month payment plan.
Residents are advised to inquire with their local council regarding potential council tax discounts they may be eligible for. Discounts, such as the 25% reduction for single occupants or 50% discount for households where all members are exempt from council tax, could apply.
Individuals receiving benefits or with low incomes are encouraged to explore Council Tax Support or Council Tax Reduction schemes offered by local authorities. These schemes may entitle individuals to a full exemption from council tax payments in certain circumstances.
Lastly, homeowners are advised to verify the accuracy of their council tax banding. If a property is deemed to be in a higher band than warranted, homeowners could be entitled to refunds and lower future bills. Conversely, if a property is underbanded, future council tax liabilities may increase.