Measure
The government announced in the Budget its proposal to introduce a High Value Council Tax Surcharge (HVCTS) for owners of residential property in England worth £2m or more.
The announcements and related documents set out the various proposed thresholds and rates payable. For residential property with values between £2m and £2.5m the rate will be £2,500 per year, with graduated rates increasing to a maximum rate of £7,500 per year for residential property with values above £5m. The government states that these charges will be increased in line with CPI each year from 2029/30 onwards.
The HVCTS will be administered alongside existing council tax bills by local authorities who will collect the revenue on behalf of central government. It is estimated that the surcharge will raise around £430m per year from 2028/29 and will support funding for local government services.
The Valuation Office has been instructed to undertake a targeted valuation exercise to identify properties above the £2m level and therefore in scope. The government expects that fewer than 1% of properties in England will be above that £2m threshold and has an ambition that revaluations will be conducted every five years.
The intention is that it will be homeowners, rather than occupiers, who will be liable for this surcharge. Occupiers will continue to pay the existing council tax charge.
The government’s plan is to launch a public consultation on the details relating to the surcharge in early 2026 and for the surcharge to take effect in April 2028.
The theory behind the HVCTS may sound straightforward, but the administrative burden could be significant.
We can see various complexities arising, partly because of the progressive nature of the tax and the sensitivity to the threshold boundaries, but also because of the work involved in providing the valuations of the properties that will incur the surcharge.
This in turn is likely to lead to some uncertainty over the next few years at the higher end of the residential property market.