A new taxation measure, known as the mansion tax, is set to impact affluent properties primarily in London and the South East, as per the latest findings on a comprehensive map. Properties valued at over £2 million will face an additional charge starting from 2028, with a minimum surcharge of £2,500.
Unveiled in Rachel Reeves’ budget, the High Value Council Tax Surcharge will be levied on top of the existing council tax. The Valuation Office will undertake a targeted valuation exercise to pinpoint properties exceeding the £2 million threshold and subject to the new fee.
While the exact number and distribution of affected properties remain uncertain, an exclusive analysis of Land Registry data by the Reach Data Unit has identified all homes in England and Wales sold for more than £2 million in the past five years. Since the beginning of 2020, over 26,500 homes have surpassed the mansion tax threshold.
Of the properties exceeding the £2 million mark since 2020, more than two-thirds (67%) are situated in London. Westminster leads with 3,832 homes sold for £2 million or more in the last five years, constituting 14% of the total nationwide, or approximately one in seven homes.
Following Westminster, Kensington and Chelsea have witnessed 3,525 such transactions, representing around 13% of the total in England and Wales. Camden follows with 1,482 (6%), succeeded by Wandsworth with 1,412 (5%), Hammersmith and Fulham with 1,212 (5%), and Richmond upon Thames with 1,068 (4%).
Outside London, Elmbridge in Surrey boasts the highest number of homes exceeding the capital’s threshold, totaling 939 properties. Bournemouth, Christchurch, and Poole lead the regions beyond the Home Counties, with 241 properties, while Cheshire East tops the list outside the South, with 183 homes.
The new system aims to enhance equity within the Council Tax structure, according to the Treasury. The average band D in England currently stands at £2,280, which the Treasury notes is £250 more annually than the band H charge for a £10 million property in Mayfair under the City of Westminster.
The mansion tax surcharge will be categorized into five bands. Properties valued between £2 million and £2.5 million will incur an annual charge of £2,500. Those falling within the £2.5 million to £3.5 million bracket will pay £3,500 per year, while homes valued between £3.5 million and £5 million will face a charge of £5,000. Properties surpassing £5 million will be subject to a £7,500 annual fee.
Starting from 2029-30, the surcharges will escalate in accordance with the CPI inflation rate.