The High Value Council Tax Surcharge, commonly referred to as the mansion tax, will not take effect until April 2028, but there are already signs that it is influencing the housing market.
Homes in England valued at £2 million or more, based on their value in April 2026, will face an additional annual charge on top of their existing Council Tax bill.
With £2 million acting as the entry point for the new charge, evidence suggests that some property transactions are already clustering immediately below the threshold.
Are property prices being affected by the £2 million threshold?
Research from Tax Policy Associates indicates a notable change in the number of properties selling at, or immediately below, £2 million.
Between December 2025 and July 2026, sales at exactly £2 million accounted for 2.70 per cent of completed transactions between £1.7 million and £2.3 million, compared with 5.69 per cent during the equivalent period a year earlier.
Meanwhile, the proportion of sales completed within £10,000 below the £2 million threshold increased from 0.44 per cent to 2.27 per cent.
Tax Policy Associates says this indicates that prices are bunching below the threshold, although there is not yet evidence that the surcharge is causing a broader fall in property values.
Under the new system, the proposed annual charges are:
Will selling a property for less than £2 million avoid the surcharge?
Reducing the sale price of a property below £2 million will not necessarily prevent the new surcharge from applying.
The Valuation Office is expected to assess homes using factors such as comparable transactions and individual property characteristics rather than relying solely on the price agreed between a buyer and seller.
This means a home sold for slightly less than £2 million could still be assessed as being above the threshold, leaving the new owner liable for the additional charge.
Buyers and sellers should also exercise caution when allocating unusually high values to furniture, fixtures or other items included with a sale in an attempt to reduce the amount attributed to the property itself.
As Stamp Duty Land Tax applies to property transactions, HMRC can examine these arrangements and consider whether the amounts attributed to individual items represent a reasonable market value.
Where they do not, additional tax could become payable alongside interest and potential penalties.
With the surcharge still some time away, buyers and sellers have an opportunity to understand the rules and factor the potential additional cost into their plans.
