The government's Valuation Office has issued crucial details on how a new levy on the most expensive homes in England will operate, following its announcement in the Labour Party's recent Budget.
How the High Value Surcharge Will Work
The new High Value Council Tax Surcharge (HVCTS) will be applied to residential properties valued at £2 million or more from April 2028. In a significant update, the Valuation Office confirmed that the charge will be entirely separate from the existing Council Tax band system, which is still based on property values from 1991.
This means that current bands, such as F, G, or H, will not be used to determine if a property qualifies for the surcharge. Instead, the Valuation Office Agency will undertake a targeted valuation exercise in 2026 to assess a property's market value at that time.
A Separate and Targeted Valuation Process
Properties identified as being worth £2 million or more will then be placed into one of four new HVCTS bands. The agency stressed that this process is "separate from, and without reference to, existing Council Tax bands."
Council Tax bands will not be affected by the new surcharge and will continue to apply as normal. Similarly, a future change to a property's standard Council Tax band will not influence its liability for the high-value surcharge.
The government expects fewer than 1% of properties in England to be above the £2 million threshold. These property values will be reassessed every five years to ensure the surcharge remains current.
Aiming for Fairness and Next Steps
The reform is designed to address perceived imbalances in the current property tax system. The government highlighted that under the present structure, the average Band D household pays £2,280 annually, which is £250 more per year than a £10 million Mayfair property pays in Band H charges in Westminster.
Charges for the new surcharge will increase yearly in line with Consumer Price Index (CPI) inflation from 2029-30 onwards.
Local authorities will be fully compensated for administering the new tax, and the government has pledged to create a support scheme for those who may struggle to pay. A consultation in the New Year will cover:
- A full set of reliefs and exemptions.
- Rules for complex ownership structures like companies, trusts, and partnerships.
- The treatment of 'tied' properties where occupancy is a condition of employment.
This move represents one of the most significant reforms to England's domestic property tax in decades, directly targeting the highest-value residential assets.
