UK Property Tax Reform 2026: The £2 Million Mansion Tax, Council Tax Admin Changes, and the Local Authority Restructure
Council tax is not being abolished. The November 2025 Budget kept it and added a new High Value Council Tax Surcharge (mansion tax) of £2,500-£7,500 a year on homes worth over £2 million, collected from April 2028. Council tax administration is also being reformed for the first time since 1993. Here is what every figure means.
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Council tax is not being abolished. The November 2025 Budget kept council tax in place and announced a new High Value Council Tax Surcharge — known publicly as a "mansion tax" — on homes worth over £2 million (gov.uk).
The same reform package included the first major overhaul of council tax billing rules since the rules were last set in 1993 (gov.uk).
The £2 million mansion tax: rates and timing
The new UK property tax will cost homeowners £2,500 to £7,500 per year, depending on property value (gov.uk). The mansion tax will apply to homeowners with properties valued at more than £2 million in 2026, and be collected alongside council tax from April 2028 (gov.uk).
Who actually pays
The Office for Budget Responsibility estimates around 165,000 households will be hit by the mansion tax (gov.uk). Around 50% of all properties in England valued at over £2 million are in London and 85% in the South East (gov.uk).
According to the Office for Budget Responsibility, the mansion tax is expected to raise £0.4 billion in 2029-30 (gov.uk).
Council tax administration: the first reform since 1993
Council tax billing rules have been left unchanged since 1993 (gov.uk).
Households will be given 63 days, roughly two months, to settle their bill (gov.uk). Councils will face a requirement to work with households on a sustainable repayment plan (gov.uk).
Billing for council tax will also be shifted to 12-month payments by default, rather than the current 10 months (gov.uk). Residents retain the ability to request 10-month billing where preferred (gov.uk).
The £100 cap on liability order costs
The reform caps the costs which councils can charge when seeking a liability order at £100 (gov.uk).
When each change takes effect
The administration reforms enter law through secondary legislation from April 2027 (gov.uk). 12-month billing for newly liable taxpayers only applies from the same date (gov.uk).
The mansion tax surcharge sits one year later, with collection alongside council tax from April 2028 (gov.uk).
Second homes premium: notice rule for restructured councils
Restructured councils must give at least 12 months' notice before introducing the second homes premium in a predecessor area where it was never previously applied (gov.uk).
Funding picture for local authorities
The combined reform package includes a 24.3% increase in Core Spending Power for local authorities (gov.uk).
What this article covers and where its limits are
Valuation appeals, individual property assessments, second homes premium rules specific to a particular council, and the detailed legal mechanics of unitary authority transition all sit outside this article. UK Calculator provides information and tools, not regulated tax or legal advice — anyone affected by the mansion tax surcharge, or contesting their property's valuation, needs a solicitor or chartered surveyor.
Frequently asked questions
Is council tax being abolished?
No. A mansion tax, officially called the High Value Council Tax Surcharge, will be introduced on homes worth over £2 million from April 2028 (HomeOwners Alliance).
When does the mansion tax start?
The mansion tax will be collected alongside council tax from April 2028 (gov.uk).
How much will the mansion tax cost?
£2,500 to £7,500 per year, depending on the property's value (gov.uk).
How many households are affected?
The Office for Budget Responsibility estimates around 165,000 households will be hit by the mansion tax (gov.uk).
What's changing about council tax bills if I'm not in a £2 million home?
Households will be given 63 days to settle a bill (gov.uk). Default billing moves from 10 months to 12 months (gov.uk). Liability order costs are capped at £100 (gov.uk).
Will my council still exist after the restructure?
Restructured councils must give at least 12 months' notice before introducing the second homes premium in a predecessor area where it was never previously applied (gov.uk).
Can I still pay over 10 months if I prefer?
Yes. Residents retain the ability to request 10-month billing where preferred (gov.uk).
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