Rachel Reeves is said to be planning to revalue 2.4million the most expensive band F, G and H homes as part of her Budget
Rachel Reeves is reportedly planning to introduce a new council tax surcharge on homes valued above £2million as part of her Budget.
The move is being dubbed a “mansion tax” and would impact more than 100,000 of the most expensive homes.
It was originally reported that the Chancellor wanted to introduce a £1.5million threshold, which would have affected 300,000 households, but she is said to have increased it to £2million to avoid penalising “asset-rich, cash poor” families.
In England, council tax is split into different bands, based on how much the property was worth in April 1991. The Chancellor is said to be planning to revalue 2.4million the most expensive band F, G and H homes to determine who will be subject to the charge.
The Times reports that people will be allowed to defer paying the tax until they move house or die. The Treasury has not commented on any Budget speculation.
Council tax bands explained
Council tax is split into bands, based on how much the property was worth in April 1991. Here is how the bands are split in England:
- A – up to £40,000
- B- £40,001 to £52,000
- C- £52,001 to £68,000
- D- £68,001 to £88,000
- E- £88,001 to £120,000
- F- £120,001 to £160,000
- G- £160,001 to £320,000
- H – more than £320,000
The average Band D council tax in England for the 2025-2026 financial year is £2,280. Scotland and Wales have different council tax bands.
Big change to council tax bills already proposed
The government is currently consulting on plans to change to spread out council tax payments over 12 months, instead of ten months.
You can request your payments be split over 12 months instead, to give yourself smaller payments – but under the new plans, this will be the default.
The average band D household would pay approximately £38 less each month if they paid over 12 months, according to figures from the the Ministry of Housing, Communities and Local Government.
Households will still be able to pay their council tax bill over ten months if they want to. The consultation is also proposing slowing down the debt collection process for when someone has missed a council tax payment.
How to cut your council tax bill
Ask your council if you’re eligible for a council tax discount. For example, if you live alone, you get 25% off your council tax bill. You get 50% off your bill if everyone living in your household is disregarded from paying council tax.
If you claim benefits or you’re on a low income, see if your local authority runs a Council Tax Support or Council Tax Reduction scheme. In some cases, you could be entitled to 100% off your bill.
Finally, see if you can challenge your council tax band. If you’re in too high of a band, you may be due thousands of pounds back, plus lower bills going forward. But do your research first, as if you’re in too low of a council tax band, your future bills will go up.
