The Labour government has announced a consultation on a new council tax rule that could allow low-income homeowners, including state pensioners, to delay payments on high-value properties until they sell their home or pass away. The High Value Council Tax Surcharge (HVCTS) applies to residential properties in England worth £2 million and above, targeting the top 1% of valuable homes.
Key Details of the Surcharge
Announced in the 2025 Budget, the HVCTS aims to raise revenue from owners of high-value properties to fund local government services and reduce inequalities in the council tax system. Owners will face extra annual charges ranging from £2,500 to £7,500, depending on property value. Existing council tax bills will continue to be paid alongside the surcharge.
Deferral Scheme for Low-Income Homeowners
Ministers are considering a deferral scheme that would allow some low-income homeowners, particularly state pensioners living in high-value properties, to postpone payments until the property is sold or the owner dies. This addresses concerns that retirees might struggle to afford the additional costs.
Labour Party minister Steve Reed stated: "This consultation seeks views on the detailed design of the High Value Council Tax Surcharge. Fewer than 1% of residential properties in England will attract the HVCTS. Revenue raised will support local government services and put local government finances back onto a sustainable footing."
The consultation welcomes feedback from local government, homeowners, tax experts, legal professionals, and the property industry on the technical design and impact of the tax.
