On 26th November 2025, Chancellor of the Exchequer, Rachel Reeves, announced a new ‘Mansion Tax’ for properties valued over £2 million in England.
The annual charge will be added on top of the existing council tax and will increase depending on the value of the property, with four separate bands.
At Myerson, we are alive to how this tax could initially unsettle our high-net-worth client base who own properties in Trafford and beyond but would like to stress that it is ‘likely to impact less than 1% of properties in England’ and most will be in concentrated in London and the South East.
In fact, we are taking an optimistic view that the announcement could pave the way for an upturn in the residential property market, for example, older homeowners downsizing.
Whether you wish to still purchase your ‘mansion’ or sell it, our expert Residential Property solicitors will keep their fingers ‘on the pulse’ and provide you with bespoke legal advice tailored to your specific circumstances.
Budget 2026 Update
In Budget 2026, the Chancellor confirmed that the Mansion Tax will go ahead as planned from April 2028, despite reports that the threshold could fall to £1.5 million.
- The threshold remains at £2 million
- The four bands are unchanged
- The government has confirmed who pays, how deferrals work and which properties are exempt (see below)
The Budget also introduced new support for first-time buyers, including Your First Home Scheme and a First Time Buyer ISA to replace the Lifetime ISA. Read our Budget 2026 blog
What will the ‘Mansion Tax’ look like?
From 2028, if your property is worth more than £2mn, you will be subjected to the ‘Mansion Tax’ on top of your existing council tax.
The tax will differ depending on the value of your property and will be determined by the following four bands:
- £2 million to £2.5 million – You will pay £2,500.
- £2.5 million to £3.5 million – You will pay £3,500.
- £3.5 million to £5 million – You will pay £5,000.
- More than £5 million – You will pay £7,500.
While the charge will be imposed on top of the existing council tax, the money will go to the Treasury rather than the local authority.
Your property value will be determined by the Valuation Office Agency.
Following the Autumn Budget 2025, the government has also published its response to this year’s consultation which confirms how the surcharge will work. We now understand the following:
- The legal owner, rather than the occupier, must pay the surcharge. Joint owners are jointly and severally liable so each could be asked to pay the full amount.
- Councils can issue bills from March 2028. Owners can defer payment until the property changes hands, or earlier if they choose, if the household has an income of £35,000 or less, capital savings of £16,000 or less, or a member who meets the disability criteria. The interest rate on deferred amounts will be set in regulations. There are some exemptions, for example: care homes, hospices, student halls of residence and military barracks.
- The government will permit some discounts of up to 100%. A non-exhaustive list includes: registered social housing, refuges, farmhouses and farmworkers’ accommodation on working farms, qualifying charity properties, and new builds still owned by the developer (until first sale, or 12 months after completion).
- Empty homes carry a 100% premium, which will apply to homes left unfurnished or unoccupied for more than twelve months. Properties will be revalued every five years. The surcharge will be legislated in the Finance Bill 2026-27, with detailed regulations to follow.
What is the purpose of the ‘Mansion Tax?’
In short, Rachel Reeves aims to use it as a vehicle to solve a ‘longstanding source of wealth inequality’’ in England.
According to the Office for Budget Responsibility, the ‘Mansion Tax’ will raise £0.4 billion in 2029 – 2030, which can then be used to assist the central government.
How does the ‘Mansion Tax’ differ from Stamp Duty Land Tax?
It is fundamental to note that these are two separate taxes.
Despite the widespread speculation about incoming stamp duty land tax changes in the 2026 Budget, the rates remain the same.
The key difference is that the ‘Mansion Tax’ will only affect homeowners with properties worth more than £2 million, whereas Stamp Duty Land Tax is a lump-sum tax paid on property purchases based on their value.
Stamp Duty Land Tax is a personal tax, and the duty payable will depend on your specific circumstances.
How can we help you to navigate the ‘Mansion Tax?’
At Myerson, we will continue to monitor the evolving political landscape and provide comprehensive updates to our clients buying and selling properties worth over £2 million.
We will sustain our optimistic outlook on the residential property market and continue to seek foresight from leading agents, such as Savills, who claim that the ‘Mansion Tax’ is ‘probably the least worst outcome for owners of prime property.’
According to a Rightmove survey conducted before the Budget, almost one in five (17%) had paused their plans due to anticipated changes to property taxes. Now that the dust has settled, we are excited to see if the ‘Mansion Tax’ will create an ‘uptick’ in the residential property market and look forward to continuing to deliver prestige legal services to our clients.
Contact Our Residential Property Team
If you are concerned about how the ‘Mansion Tax’ may affect your property or future plans, our expert Residential Property team is here to help.
0161 941 4000
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Laura Higgins
Associate
Laura is an Associate in our Residential Property team. Laura has experience in a wide range of residential property transactions, including freehold and leasehold sales and purchases, Transfers and Assents.
About Laura Higgins