The introduction of ATED (Annual Tax on Enveloped Dwellings) back in 2013, which levies a tax on companies with residential property worth over £500,000, brought in a new tax on “high value” residential property. Over a decade later, a new High Value Council Tax Surcharge (HVCTS) is now being levied in England, this time on individual home ownership on property valued at over £2 million. The new annual recuring surcharge will be introduced from April 2028 and will run alongside the pre-existing council tax liability levied on the property.
The justification? Rachel Reeves’ Budget theme focused on asking “everyone to contribute”, whilst keeping that contribution “as low as possible”. For the property-rich, this tax system reform appears to come in the form of this additional tax, which absent a complete overhaul of council tax “banding”, which some may consider is long overdue, focuses on the most expensive (top 1%) of residential properties. The Chancellor observed that an average Band D family home pays more in Council Tax than a £10 million property in Westminster. The introduction of a High Value Council Tax Surcharge on homes worth over £2 million is her answer to this, and is expected to follow a tiered system:
| Property value banding (£m) | Rate (£) |
| 2 – 2.5 | 2,500 |
| 2.5 – 3.5 | 3,500 |
| 3.5 – 5.0 | 5,000 |
| 5+ | 7,500 |
The new tax is likely to be geographically concentrated in its impact, primarily in the south and unsurprisingly, could be most felt in London and the Cotswolds.
The overall impact to the exchequer is to an increased tax generation of more than £400m by 2031.
The charge will be based on updated valuations to identify properties above the £2m threshold. How such a refreshed valuation system will be implemented will be interesting to see, considering the current council tax ‘banding’ system dates back to 1991. The government says it will consult on this and other matters related to implementation.
Importantly, this charge will be levied on property owners, not occupiers; and could be an additional hit on landlords who are already impacted by the new Renters’ Rights Act coming into effect in May 2026.