Mansion Tax Explained: Bands, Valuations and Where England's £2m Homes Are

"Mansion tax" is how most people search for it. Officially it's the High Value Council Tax Surcharge (HVCTS): a new annual charge on homes in England worth £2 million or more, announced at the November 2025 Budget and due to start in April 2028. This guide covers how it is meant to work, then uses HM Land Registry sold-price data to answer two questions the official papers don't: where England's £2 million homes actually are, and whether the line is already changing what people pay.

Status on 27 October 2026: the design below is the government's proposal, set out in a consultation that ran from 19 May to 14 July 2026. The response hasn't been published yet, and the main rules are expected in a future Finance Bill. If the Budget on 28 October 2026 or later legislation changes any of it, we'll update this page.

The mansion tax in one table

	What's proposed
Who pays	The legal owner, not the tenant or occupier
Where	Residential property in England only
Threshold	Homes valued at £2 million or more in 2026
Starts	April 2028, with the first bills in March 2028
On top of	Ordinary council tax, which stays as it is
Collected by	Local councils, on behalf of central government
Valued by	The Valuation Office, now part of HMRC
Revalued	Every five years; the next revaluation is planned for 2033
Expected to raise	Around £430 million a year from 2028/29

The four bands

Value in 2026	Annual surcharge
£2 million to £2.5 million	£2,500
£2.5 million to £3.5 million	£3,500
£3.5 million to £5 million	£5,000
Over £5 million	£7,500

The charges rise with CPI inflation every year. The £2 million threshold and the band edges are only reviewed at revaluations, so if prices rise faster than inflation, each revaluation will pull more homes in.

How homes will be valued

There's no form to fill in. The Valuation Office (VO), which stopped being a separate agency and became part of HMRC on 1 April 2026, will work out which homes were worth £2 million or more in 2026. This is a new and separate exercise: it doesn't start from your existing council tax band, which in England still rests on 1991 values.

According to the consultation:

• The VO will use the comparable method, valuing each home against sales of similar homes nearby.
• Automated valuation models give a first estimate, and professional valuers review it, leaning harder on judgement where sales evidence is thin or a property is unusual.
• The VO may contact owners to confirm or clarify details about a property.
• A draft list is due in late 2027, when owners can ask for factual corrections, ahead of the first bills in March 2028.

The practical upshot: the surcharge doesn't depend on what you paid, but it does depend heavily on what similar homes sell for. That's why the sold-price data below matters.

Who pays, and who doesn't

• The legal owner pays. For a flat or house held on a lease originally granted for more than 21 years, that's the leaseholder; otherwise it's the freeholder. Joint owners are jointly and severally liable. Where a company owns the home, the company is liable; for a trust, the trustees.
• Second homes and let property are in. The surcharge applies to residential property, not just your main home.
• Proposed exemptions include purpose-built student halls, Ministry of Defence and diplomatic accommodation, homes owned by registered social housing providers, care accommodation, domestic-abuse refuges, and new-builds still held by the developer (until the first sale, or 12 months after the completion notice if that comes first).

Deferring the charge

The consultation proposes letting some owners defer the surcharge until the home is sold or changes hands, rather than paying each year. As drafted it applies only to a main home, for households with an income of £35,000 or less and savings of £16,000 or less (the consultation also asked whether meeting either test should be enough), with interest added and the debt secured on the property. Second homes can't be deferred.

Where England's £2 million homes sell

The government says fewer than 1% of homes in England will pay. The sales register agrees. In the 12 months to 31 March 2026, HM Land Registry recorded 668,239 standard residential sales in England. Just 3,579 of them — 0.54% — were for £2 million or more.

Sale price	Sales (12 months to 31 Mar 2026)	Share of £2m+ sales
£2m up to £2.5m	1,435	40.1%
£2.5m up to £3.5m	1,251	35.0%
£3.5m up to £5m	498	13.9%
£5m and over	395	11.0%
All £2m+	3,579	100%
For comparison: £1.5m up to £2m	4,250	—

Two things stand out. Two in five £2m+ sales fall in the lowest band, where a small difference in valuation decides whether a home pays at all. And more homes sold in the £500,000 just below the line (4,250) than in everything above it (3,579). Those are the owners with most at stake in how the Valuation Office draws its numbers.

The mix is not just mansions. Of the 3,579 sales, 45% were detached houses, 24% terraces, 18% flats and 13% semis. 18% were leasehold.

London holds almost two-thirds

2,299 of the 3,579 sales (64%) were in Greater London, where 3.3% of all standard sales cleared £2 million, against 0.54% for England as a whole. The ten local authorities with the most £2m+ sales:

Local authority	£2m+ sales	Share of all its sales
Kensington and Chelsea	416	28.6%
City of Westminster	401	22.4%
Camden	211	13.1%
Wandsworth	167	4.0%
Hammersmith and Fulham	161	9.1%
Richmond upon Thames	152	6.5%
Elmbridge (Surrey)	113	6.2%
Islington	113	6.8%
Barnet	97	3.3%
Buckinghamshire	90	1.3%

At postcode-district level, the biggest clusters are in north and west London:

Postcode district	Areas	£2m+ sales	Share of its sales
NW3	Hampstead, Belsize Park	127	24.6%
SW6	Fulham, Parsons Green	107	13.8%
SW3	Chelsea	98	33.8%
W8	Kensington	89	39.6%
SW7	South Kensington	80	39.2%
W11	Notting Hill, Holland Park	74	31.2%
NW8	St John's Wood	58	28.9%

In a few districts, £2 million is the norm rather than the exception: 43 of the 77 standard sales in SW1X (Belgravia, Knightsbridge) cleared it, as did 36 of 73 in W1U (Marylebone) and 39 of 84 in SW1W.

Outside London: the commuter belt, and not much else

Outside the capital, the £2 million market is a ring of commuter towns in Surrey, Buckinghamshire, Hertfordshire, Berkshire and Kent:

Postcode district	Town	£2m+ sales	Share of its sales
HP9	Beaconsfield	34	15.0%
KT11	Cobham	34	15.6%
AL5	Harpenden	27	6.6%
SL5	Ascot	26	7.6%
TN13	Sevenoaks	26	7.6%
WD7	Radlett	24	14.9%
OX2	Oxford (north and west)	24	4.9%
KT10	Esher	22	7.5%

Further north the numbers drop sharply. Cheshire East (the Alderley Edge and Wilmslow market) recorded 32 sales over £2 million, Greater Manchester 27 (22 of them in Trafford, around Altrincham and Hale), North Yorkshire 17 and Tyne and Wear just 2. 127 of the 296 local authorities in England recorded no standard sale at £2 million or more in the year.

These are sales, not the whole housing stock. A district where big homes rarely change hands will have more £2m+ homes than its sales suggest. The pattern of where they sit is still a fair guide to where the surcharge will land.

Since the announcement, sales are stopping just short of £2 million

A price line in a tax usually leaves a mark in the sales data. We found one at the stamp duty relief ceiling, so we looked for one here.

The surcharge was announced on 26 November 2025. We compared England's standard sales in the £50,000 either side of £2 million for the 12 months before the announcement and for the nine months since (to the latest sales registered, in late August 2026):

Period	£1.95m – £1,999,999	£2m – £2,049,999	Share just below £2m
12 months before (26 Nov 2024 – 25 Nov 2025)	259	272	49%
Since (26 Nov 2025 – Aug 2026)	124	48	72%

Before the announcement, sales just under and just over £2 million were almost level, which is what you'd expect at a round number with no tax attached. Since, nearly three out of four land just below. Quarter by quarter, the share below the line sat between 43% and 55% in every quarter from early 2024 to the end of 2025, then jumped to 72% in January–March 2026 and 82% in April–June.

Smaller details point the same way:

• Sales at exactly £2,000,000 made up 8.7% of all sales between £1.8 million and £2.2 million before the announcement, and 4.2% since.
• £1,999,999 was paid once in the 23 months of records before the announcement, and six times in the nine months since.

The control test: other price points didn't move

A shift like this could come from a cooling top end of the market. If that were the cause, other round numbers would show it too. They mostly don't:

Price point	Share in the £50k below, before	Since	Change real?
£1.25 million	51%	50%	No
£1.5 million	51%	52%	No
£1.75 million	53%	54%	No
£2 million	49%	72%	Yes (p < 0.0001)
£2.25 million	51%	44%	No
£2.5 million	39%	44%	No
£3 million	38%	30%	No

The one other price point with a statistically detectable change is £1 million, where the share below edged up from 65% to 68%. That's a small drift, consistent with a softer top end generally, and nothing like the £2 million jump. The effect also shows up both in London (49% → 75%) and outside it (48% → 69%), so it isn't one market's story.

Why a sale price matters when it's the valuation that counts

The surcharge is set by the Valuation Office's view of a home's 2026 value, not by its sale price. So why would buyers and sellers care which side of £2 million a deal lands? Two reasons, and the register can't tell them apart:

1. A 2026 sale is the best evidence a valuer can have. Under a comparable method, a home that sold for £2.02 million in 2026 is very hard to place below the line. A sale at £1.995 million doesn't guarantee a lower band, but it leaves the strongest piece of evidence on the right side of it.
2. Buyers are pricing the surcharge in. At £2,500 a year, rising with inflation, a buyer keeping a home for ten years faces more than £25,000 of surcharge. Shaving a £2.02 million deal to £1.995 million costs the seller £25,000 too. On those numbers, meeting just below the line is close to rational for both sides.

The data also can't tell us whether deals moved below £2 million or simply didn't happen above it. Either way, the result for anyone selling a home worth close to £2 million is the same: the market just above the line has thinned out.

If your home might be worth close to £2 million

1. Find out roughly where you sit now. Look up recent sold prices for your postcode district on Offrly's property price studies pages, then run a valuation. The price bracket is free and shows the first digit of the estimate, so £1,XXX,XXX or £2,XXX,XXX answers the threshold question straight away. If you're close to the line, the full report adds the exact figure, its 90% range and the comparable listings behind it. It isn't the Valuation Office's figure, and nobody outside HMRC can tell you what that will be. But it tells you whether you're comfortably clear or worth watching.
2. Start keeping evidence now. If the draft list in late 2027 puts your home over £2 million and you think it's wrong, you'll want evidence: sales of comparable homes nearby under £2 million, anything that makes yours worth less than its neighbours (condition, a short lease, a smaller plot, a busy road), and an accurate floor area. Check any details the Valuation Office sends you.
3. If you're selling near the line, expect buyers to negotiate hard just above it. The data says a growing share of deals now land between £1.95 million and £1,999,999.
4. If you're buying just above it, budget for the surcharge on top of stamp duty, and ask how close the home is to the line. A home bought for £2.1 million in 2027 may already have been valued as at 2026.
5. If cash flow would be the problem, watch for the final deferral rules. As proposed, they cover main homes for households under the income and savings limits above.

How we calculated this

• Source: HM Land Registry Price Paid Data, standard residential sales (category A) in England. Category B transfers, including most purchases by companies, are excluded, which undercounts the very top of central London. Welsh sales are excluded because the surcharge applies to England only.
• Where the homes are: sales dated 1 April 2025 to 31 March 2026, the latest 12-month window that HM Land Registry's registration lag allows us to treat as complete.
• The £2 million test: sales between £1.95 million and £2,049,999, dated 26 November 2024 to 25 November 2025 (before) and 26 November 2025 to 27 August 2026 (since). Compared with a two-proportion z-test (z = 5.3 at £2 million), with the same test run at the other price points as controls.
• What it can't tell you: sale dates are completion dates, so the earliest "since" sales were agreed before the announcement. The latest months are still filling in as sales are registered. And the post-announcement sample is small (172 sales either side of the line), so the exact percentage will move as more sales are registered. The direction of the shift, and its absence at the control price points, is the finding.

Sources

• GOV.UK — High Value Council Tax Surcharge consultation (MHCLG, HM Treasury and HMRC, 19 May 2026), for the bands, valuation approach, liability, exemptions, deferral, challenges and timetable.
• House of Commons Library — High Value Council Tax Surcharge (HVCTS), for the announcement, consultation status and Finance Bill.
• Civil Service World — Valuation Office Agency absorbed into HMRC, for the 1 April 2026 change.
• HM Land Registry Price Paid Data, licensed under the Open Government Licence v3.0. Contains HM Land Registry data © Crown copyright and database right 2026.

This article is general information, not tax or legal advice. The surcharge's final rules will be set in legislation; for advice on your own position, speak to a tax adviser, and for a formal valuation, a RICS-registered valuer.

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