High Value Council Tax Surcharge: the £2 million homes charge explained
Not law as at 30 Oct 2026: a planned £2,500 to £7,500 yearly charge on homes in England worth £2m or more from April 2028. Bands, who pays, deferral.
Is it law? Not as at 30 October 2026
The High Value Council Tax Surcharge (HVCTS) is a planned yearly charge on owners of homes in England worth £2 million or more, on top of ordinary council tax. Under the announced design it is £2,500 to £7,500 a year depending on the home's value, and the government plans for it to apply from 1 April 2028 (tax information and impact note).
As at 30 October 2026 it was announced, not law. It was announced at Budget 2025 (HMRC and VOA news story, 28 November 2025). At Budget 2026 on 28 October 2026 the government said it "will introduce legislation in Finance Bill 2026-27 to establish the High Value Council Tax Surcharge" (OOTLAR 1.22), followed by detailed regulations and guidance "once the Finance Bill receives Royal Assent" (government response, para 10.1). When we checked on 30 October 2026, the Finance Bill had not been passed. Until the Finance Bill becomes law, and in any case before 1 April 2028, there is no surcharge: homes in England pay ordinary council tax only. Everything below is the government's published plan and can change before it becomes law.
The announced bands and charges
The Valuation Office will run a targeted valuation exercise to find homes in scope and place each one in one of four bands. These are the charges published at Budget 2026 (HM Treasury guidance; impact note):
| HVCTS band | Property value (as published) | Announced annual charge |
|---|---|---|
| Band 1 | £2.0m to £2.5m | £2,500 |
| Band 2 | £2.5m to £3.5m | £3,500 |
| Band 3 | £3.5m to £5.0m | £5,000 |
| Band 4 | £5m+ | £7,500 |
- Value at April 2026. The guidance describes the charge as applying to property "worth £2 million or more in 2026", valued using sales evidence "around the April 2026 valuation date" together with property type, age, number of rooms and area, with a valuer placing each home in its band.
- Exact band edges are not yet set out. The published table prints the ranges as "£2.0-2.5", "£2.5-3.5" and "£3.5-5.0" without saying which band a value of exactly £2.5m, £3.5m or £5m falls in. That will be for the legislation.
- CPI uprating. "Charges will increase in line with CPI inflation each year from 2029-30 onwards." Whether the value bands themselves move is to be decided "alongside revaluations" (guidance).
- Revaluation every five years. The guidance says the next revaluation will take place in 2033.
- Empty homes. A premium of 100% is planned on homes left substantially unfurnished and unoccupied for 12 months or more (response para 6.12). The government did not take forward a separate premium for non-UK resident owners, and says it will keep premiums under review (para 6.12).
The impact note estimates that about 150,000 individuals own residential property worth £2 million or more and would be liable, and the guidance expects fewer than 1% of properties in England to be above the threshold. These are the government's estimates, not a statement about any particular home.
Who would pay: the owner, not the occupier
This is the biggest difference from ordinary council tax, which is generally charged to the occupier (the response, para 3.2, contrasts the two). The guidance says "Homeowners, rather than occupiers, will be liable to the surcharge and will continue to pay their existing Council Tax alongside the surcharge." The government response (para 3.3) confirms the liability rules proposed in the consultation (para 3.1). Under that plan:
- the legal owner would be liable, meaning the freeholder or leaseholder, not a beneficial owner;
- a leaseholder would be liable where the lease was initially granted for more than 21 years, or the law treats it as granted for more than 21 years;
- joint owners would be jointly and severally liable, so the council could pursue any one of them for the whole charge;
- a company that legally owns the property would be liable;
- trustees would be liable for property held in trust.
So a tenant on an ordinary tenancy of a £2 million home (a lease of 21 years or less) would not be liable for the surcharge; the landlord would. The tenant would keep paying ordinary council tax in the usual way. The government says it will publish more on support for some leasehold interests, such as leases with a short remaining term (response paras 3.2 and 3.3).
How it relates to ordinary council tax
- Separate charge, same bill collector. Local councils will collect the surcharge on behalf of central government, alongside existing council tax (impact note). The guidance says councils will issue the first bills in March 2028.
- Council tax bands are not used. HMRC and the VOA said after Budget 2025 that the surcharge "will not be determined by current Council Tax bands" (bands F, G and H are not the test), that current bands "will not be affected and will still apply", and that "a change in Council Tax band will not affect eligibility for the surcharge" (HMRC and VOA news story, 28 November 2025). Council tax in England is still banded on 1991 values; the surcharge uses a fresh valuation.
- Your council tax bill does not change because of it. To see what a home's ordinary council tax is, use the council tax calculator, and for how bands, discounts and exemptions work see the complete council tax guide.
- Council Tax Reduction. The help the government has announced for the surcharge is the deferral scheme below; it has not said that Council Tax Reduction will reduce the surcharge. The deferral savings test is set to align with pension age Council Tax Support (response para 4.7). For help with ordinary council tax, see the Council Tax Reduction guide.
Deferral: paying when the home changes hands
The government says it will make a deferral scheme available to owners who meet one of these criteria (guidance; response para 4.7):
- annual household income of £35,000 or less, or
- capital savings of £16,000 or less, or
- a member of the household meets disability criteria.
Deferral delays payment until ownership changes. You could end it and settle earlier at any time. The guidance says "A fair rate of interest will be applied", and the response (para 4.11) says the level of interest will be set in regulations. How deferral would be managed in more complex cases such as probate will also be set out in secondary legislation (para 4.8). Councils will assess eligibility against national criteria.
Exemptions and discounts announced so far
Exempt properties are not valued at all; discounted properties are valued and the owner applies to the council for a discount (response paras 5.2 and 5.3). The response says a full list of exempt properties will be set out in secondary legislation, so these lists are not final.
Exempt (response para 5.9):
- purpose-built halls of residence provided predominantly for students;
- property used predominantly to accommodate people receiving long-term care, such as care homes, long-stay hospital accommodation and hospices;
- Ministry of Defence barracks used predominantly to accommodate the armed forces or a visiting force.
Discount of up to 100% (response para 5.10):
- other MoD property used predominantly to accommodate the armed forces or a visiting force;
- property owned by a sovereign nation predominantly to accommodate diplomats;
- property owned by a registered social housing provider;
- property owned predominantly to accommodate people seeking refuge from domestic violence;
- new-build property owned by a developer, until the sooner of first sale or 12 months after the completion notice was issued.
A discount, level not yet stated (response paras 5.11 and 5.12):
- farmhouses, and associated farmworkers' accommodation, on working farms;
- property owned by a charity where a charitable purpose test is met.
The response does not extend a discount to tied accommodation in general, only to farmhouses and farmworkers' accommodation on working farms (para 5.11). For owners who find the charge hard to pay, the support announced is deferral.
The published timetable, challenges and penalties
- Draft bands: the guidance says taxpayers "will be able to see their draft bands in Autumn 2027".
- First bills: the guidance says councils will issue the first bills in March 2028, for a charge planned to start on 1 April 2028.
- Challenges and appeals: under the plan, owners would be able to challenge a banding decision, including whether the home is in scope, with the Valuation Office, and their liability with the council, then appeal to the Valuation Tribunal for England. The consultation proposed an initial 8-month window to challenge banding from the introduction of the surcharge, and 6 months for owners who become liable after that period (response para 7.1); the final rules will be in the legislation.
- Information penalties: under the plan, councils would be able to ask an assumed owner for identifying information, and may apply a penalty if the owner does not respond or knowingly gives false information (response para 6.1). The proposed penalty, which the government says is appropriate, is 10% of the annual liability, which may be applied if the information is not provided within 21 days and may increase to 30% if it is still not provided after a further 21 days. Penalties will also apply to others such as managing agents (response paras 6.2 and 6.9).
- Enforcement: unpaid charges are to be enforced broadly as council tax is, through a liability order from the magistrates' court (impact note; response para 8.5).
For the other tax measures announced on 28 October 2026, see the Budget 2026 summary.
Frequently asked questions
Is the High Value Council Tax Surcharge law?
Not as at 30 October 2026. It was announced at Budget 2025 and Budget 2026 said it will be legislated in Finance Bill 2026-27, with detailed rules in regulations after that Bill receives Royal Assent. When we checked on 30 October 2026 the Bill had not been passed. The figures on this page are the announced design.
How much is the High Value Council Tax Surcharge?
Under the announced design there are four bands: £2,500 a year for homes valued £2m to £2.5m, £3,500 for £2.5m to £3.5m, £5,000 for £3.5m to £5m and £7,500 for £5m and above. The government says the charges will rise with CPI each year from 2029-30.
Who pays the surcharge, the owner or the tenant?
Under the announced plan, the owner. The government says homeowners, rather than occupiers, will be liable. That would be the legal owner: a freeholder, or a leaseholder whose lease was granted, or is treated by law as granted, for more than 21 years. Joint owners would be jointly and severally liable, a company would pay where it owns the property, and trustees would pay for property held in trust.
Does the surcharge replace council tax?
No. Under the announced plan it would be a separate charge paid alongside ordinary council tax, collected by the local council for central government. Your council tax band would not be changed by it, and your council tax band would not decide whether the surcharge applies.
Can I defer the High Value Council Tax Surcharge?
The government plans a deferral scheme for owners whose household income is £35,000 or less, or whose capital savings are £16,000 or less, or where a member of the household meets disability criteria. Deferred charges would be paid when ownership changes, with interest at a rate still to be set in regulations.
Does the surcharge apply in Scotland, Wales or Northern Ireland?
No. The Budget 2026 document says the High Value Council Tax Surcharge applies to England only.