Rachel Reeves is said to be considering implementing a new levy on properties valued over £2 million in her upcoming budget. This proposed measure, often referred to as a “mansion tax,” would affect over 100,000 high-end homes.
Initially, reports suggested the Chancellor was considering a £1.5 million threshold, impacting 300,000 households. However, the threshold has reportedly been raised to £2 million to avoid burdening families deemed as “asset-rich, cash poor.”
In England, council tax is categorized into bands determined by property values from April 1991. It is rumored that the Chancellor plans to reassess the valuations of the most expensive band F, G, and H homes, identifying those subject to the proposed surcharge.
According to The Times, individuals may have the option to postpone payment of the tax until they sell their property or pass away. As of now, the Treasury has refrained from commenting on any budget-related speculations.
In England, council tax bands are structured based on property valuations from 1991. The average council tax for a Band D property in England for the 2025-2026 fiscal year stands at £2,280. Scotland and Wales have their own distinct council tax banding systems.
The government is presently seeking feedback on a proposal to extend council tax payments over 12 months instead of the current ten. While households can request the 12-month installment plan for smaller payments, the new scheme may automatically enforce this change.
Households under Band D could save around £38 monthly if they opt for the extended payment period, as per data from the Ministry of Housing, Communities, and Local Government. However, the current ten-month payment option will remain available, alongside a proposal to streamline the debt collection process for overdue payments.
Residents are advised to inquire with their local council about potential council tax discounts, such as a 25% reduction for single occupants or a 50% discount for households where all members are exempt from paying. Those receiving benefits or with low incomes should explore Council Tax Support or Reduction programs offered by local authorities, which could lead to substantial bill reductions or exemptions.
Furthermore, homeowners are encouraged to review their council tax banding and challenge it if necessary. Correcting an overvalued band could result in refunds and lower future bills, although caution is advised as disputing a lower band might lead to increased future payments.