High Value Council Tax Surcharge – more details
27 Nov 2025
2 min read
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Following yesterday's budget announcement, a few more details have emerged from the accompanying notes on HVCTS.
Firstly, to clarify, the tax will only apply in England. Local Government taxation is devolved in Scotland, Wales and Northern Ireland. Payment is to be collected by Local Authorities in England on behalf of central government, but will support funding of local government services.
Secondly, the initial rates shown in the table below will rise each year, index-linked to CPI. The Valuation Office will undertake a valuation exercise before the tax becomes payable in April 2028 to determine the properties within scope and their appropriate rate of payment. Whilst some commentary assumes that properties in Council Tax bands F, G and H will be valued, the notes do not mention those bands explicitly, and it may be that the Valuation Office will use other means to identify likely properties, such as Land Registry price paid data. Once identified, those properties will be revalued every 5 years.
It is probable that the surcharge will slightly distort the sale prices of higher-end properties with an incentive to value them at just below each threshold. Periodic re-valuations may also distort market behaviour — deterring home buyers from committing until the outcome of a forthcoming revaluation is known. There is an obvious likelihood of appeals which may also delay marketing until resolved.
| Threshold (£m) | Rate (£) |
|---|---|
| £2.0-2.5 | £2,500 |
| £2.5-3.5 | £3,500 |
| £3.5-5.0 | £5,000 |
| £5+ | £7,500 |
HVCTS will be payable by the property owner — not the occupier if different, presumably to prevent it being directly passed on to tenants who may pay council tax for the property. It is expected this will include trusts, companies, and partnerships. It will not apply to owners of Social Housing and there will be a consultation paper in the New Year on how to support those who might struggle to pay, as well as on other reliefs and exemptions.
As far as we can tell at present, any property to which ATED (Annual Tax On Enveloped Dwellings) also applies — corporate owners — will continue to pay that in addition to any HVCTS charge unless their owner can claim an exemption.
The impact of this new tax should become clearer when the promised consultation is published in the New Year.
A typical family home in England pays more council tax than a £10 million Westminster mansion, so the Budget also introduces a High Value Council Tax Surcharge on homes worth more than £2 million, while protecting those on low incomes.