Owners of expensive homes in the UK face annual “mansion tax” bills of up to £15,000 if their properties remain empty for 12 months or more, under plans set out by the Treasury. The 100% premium on the high-value council tax surcharge will apply to long-term empty properties above the £2 million value threshold from April 2028.
The charge, first announced by former chancellor Rachel Reeves, will be levied annually on top of council tax, with rates rising in line with inflation. The mansion tax will start at £2,500 a year for properties valued at £2 million or more, rising to £7,500 for homes in the highest band, worth £5 million and above.
Properties that are “substantially unfurnished and unoccupied for a period of 12 months or more” will face double charges, in line with existing council tax premiums for long-term empty homes. Owners of properties worth at least £5 million could pay up to £15,000 a year in mansion tax, in addition to double council tax bills, once the policy comes into force in April 2028.
The premium will apply to all “underused” homes above the threshold. The Government had initially considered proposals for a double tax on non-resident owners. However, exemptions, discounts and deferral schemes are expected to reduce the revenue raised by the policy.
Commenting on the announcement, Helen Hutchison, residential property partner at Irwin Mitchel, said: “London homeowners are likely to feel the impact of this more than most, given the number of properties in the capital that will exceed the £2 million threshold.” She added that the “real sting could be for high-value homes that remain substantially unfurnished and unoccupied for 12 months or more,” and that it is “another sizeable annual cost that buyers will now need to factor into the economics of owning a high-value London property.”
Victoria Mellon, head of conveyancing at solicitors Setfords, said the mansion tax could “trigger a wave of disputes over property valuations.” She said that for homeowners “sitting just above one of the tax thresholds, even a relatively small difference could leave them paying thousands of pounds more every year.”
The legislation also confirmed deferred tax payments could be made amid concerns about the impact on “asset-rich, cash-poor” households. Households earning less than £35,000 or with savings of £16,000 or less can defer the charge and accrued interest until the property is sold. This would apply to properties serving as the main home for disabled or severely mentally impaired residents, for example.
Exemptions will also apply to purpose-built student halls of residence, care homes, long-stay hospital accommodation, hospices, and Ministry of Defence barracks. Properties owned by sovereign nations or those acting as refuges for victims of domestic abuse will also be exempt. Discounts will apply to farmhouses on working farms and properties owned for charitable purposes.
The Office for Budget Responsibility estimates that receipts will be around £45 million to £50 million a year lower by 2030 to 2031 than its initial projections.
Analysis
Why This Matters
- London’s prime property market will be disproportionately affected, with many homes exceeding the £2 million threshold.
- The tax could trigger valuation disputes and deter overseas or part-time owners.
- Deferral and exemption schemes reduce revenue but provide relief for cash-poor, asset-rich households.
Background
The mansion tax was first proposed by former chancellor Rachel Reeves and follows a government consultation on a “high-value council tax surcharge.” The policy is part of the broader Budget delivered by Chancellor John Healey on Wednesday.
Key Perspectives
Helen Hutchison, residential property partner at Irwin Mitchel: Says London homeowners are likely to feel the impact most, and the double charge for empty homes is a particular concern for overseas owners who may spend long periods away. She calls it “another sizeable annual cost” for buyers.
Victoria Mellon, head of conveyancing at Setfords: Warns the tax could “trigger a wave of disputes over property valuations,” especially for homes just above thresholds where small differences lead to large cost variations.
What to Watch
- Potential legal challenges to property valuations as owners contest bandings.
- Impact on the London housing market, particularly sales of high-value homes.
- Any further government adjustments to thresholds or exemptions before April 2028.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedThe headline says some homes worth £5 million or more that remain empty could face annual mansion-tax bills of up to £15,000.The Standard London: “Owners of properties worth at least £5 million could pay up to £15,000 a year in mansion tax, in addition to double council tax bills, once the policy comes into force in April 2028.”
- SupportedThe summary says a 100% premium will apply to long-term empty homes above the £2 million threshold from April 2028.The Standard London: “The 100% premium on the high-value council tax surcharge will apply to long-term empty properties above the £2 million value threshold from April 2028.”
- SupportedOwners of expensive homes face annual bills of up to £15,000 if their properties remain empty for 12 months or more.The Standard London: “Owners of expensive homes face annual “mansion tax” bills of up to £15,000 if their properties remain empty for at least 12 months, under plans set out by the Treasury.”
- SupportedRachel Reeves, described as a former chancellor, first announced the charge.The Standard London: “The charge, first announced by former chancellor Rachel Reeves, will be levied annually on top of council tax, with rates rising in line with inflation.”
- SupportedThe annual charge starts at £2,500 for properties valued at £2 million or more and rises to £7,500 for homes worth £5 million or more, with rates rising in line with inflation.The Standard London: “The mansion tax will start at £2,500 a year for properties valued at £2 million or more, rising to £7,500 for homes in the highest band, worth £5 million and above.”
- SupportedHomes substantially unfurnished and unoccupied for 12 months or more will face double charges.The Standard London: “But properties that are “substantially unfurnished and unoccupied for a period of 12 months or more” will face double charges, in line with existing council tax premiums for long-term empty homes.”
- SupportedHelen Hutchison said London homeowners are likely to feel the impact more than most because many capital properties exceed the £2 million threshold.The Standard London: ““London homeowners are likely to feel the impact of this more than most, given the number of properties in the capital that will exceed the £2 million threshold.””
- SupportedHutchison said the “real sting” could be for high-value homes substantially unfurnished and unoccupied for 12 months or more.The Standard London: “the real sting could be for high-value homes that remain substantially unfurnished and unoccupied for 12 months or more.”
- SupportedVictoria Mellon said the mansion tax could “trigger a wave of disputes over property valuations.”The Standard London: “Victoria Mellon, head of conveyancing at solicitors Setfords, said the mansion tax could “trigger a wave of disputes over property valuations”.”
- SupportedHouseholds earning less than £35,000 or with savings of £16,000 or less can defer the charge and accrued interest until the property is sold.The Standard London: “Households earning less than £35,000 or with savings of £16,000 or less can defer the charge and accrued interest until the property is sold.”
- SupportedThe story lists student halls, care homes, long-stay hospital accommodation, hospices, Ministry of Defence barracks, sovereign-owned properties and refuges for domestic-abuse victims as exempt, and says working-farm farmhouses and charitable-purpose properties receive discounts.The Standard London: “Exemptions will also apply to purpose-built student halls of residence, care homes, long-stay hospital accommodation, hospices, and Ministry of Defence barracks. Properties owned by sovereign nations or those acting as refuges for victims of domestic abuse violence will also be exempt. Discounts will apply to farmhouses on working farms and properties owned for charitable purposes.”
- SupportedThe OBR estimates receipts will be around £45 million to £50 million a year lower by 2030 to 2031 than its initial projections.The Standard London: “The Office for Budget Responsibility estimates that receipts will be around £45 million to £50 million a year lower by 2030 to 2031 than its initial projections.”