Announcing the measures today, Rachel Reeves said: “In this Budget, I will take further steps to deal with a long-standing source of wealth inequality in our country. A [council tax] band A home in Darlington or Blackpool pays just under £2,400 in council tax, nearly £300 more than a £10m mansion in Mayfair.”
To remedy this, the government will introduce a High Value Council Tax Surcharge (HVCTS) from 2028, starting at £2,500 for properties valued between £2m and £2.5m and going up to £7,500 for homes worth £5m or more.
This will be based on the Valuation Office’s evaluation of 2026 prices and will be uprated by Consumer Prices Index (CPI) inflation each year.
Details of the Chancellor’s Budget were mistakenly published early in the Office for Budget Responsibility’s (OBR’s) forecast, which confirmed that homeowners of high-value properties would be liable for an annual charge on top of council tax from April 2028.
The OBR released a statement saying: “A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed.
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“We apologise for this technical error and have initiated an investigation into how this happened.
“We will be reporting to our Oversight Board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.”
The report said this would raise £400m in 2029-30 and add £500m to council tax receipts.
The OBR predicted that the cost of the surcharge would be passed onto property prices and that there would be “price bunching” below each band boundary. This could lower the number of properties liable for the council tax surcharge and see some move into lower-charging bands. It could also reduce the intake from other property taxes like stamp duty and capital gains.
It also expected non-compliance and appeals to the surcharge.
The OBR assumed there will be some council tax exemptions and deferrals for people who cannot pay straightaway. The government will consult on details of the reliefs and exemptions, appeals, deferrals and support.
