The government will introduce a high-value council tax surcharge on properties worth more than £2m from April 2028, Chancellor, Rachel Reeves, has announced.

In her Autumn Budget, Reeves revealed that the so-called ‘mansion tax’ will apply to homes with a value greater than £2m, aiming to help the government plug the fiscal hole in public finances.

The tax is expected to raise £400m a year by the 2029/30 financial year, with those affected being liable for a recurring annual charge that will be added to existing council tax charges.

There will be four price bands, with properties valued at between £2m and £2.5m having a £2,500 annual surcharge, rising to £7,500 a year in the highest band for properties worth more than £5m, all uprated by CPI inflation each year.

The government announced a consultation on the details of reliefs and exemptions, the design of the appeals system, and the deferral and support mechanisms that will be available.

In its Economic and Fiscal Outlook, which was leaked ahead of the Budget, the Office for Budget Responsibility said it assumed that, over time, there would be a full pass-through of the cost of the surcharge into the prices of liable properties, alongside price bunching just below each band boundary.

Commenting on the announcement, Mercer private wealth leader, Steve Sands, said: “This proposed property tax will not yield the results the Chancellor wants.

“It is expected to be very costly to administer and could put the brakes on high-end property values, which could reduce inward investment and stagnate the wider housing market.

“In the vast majority of cases, it is likely to penalise people whose houses have risen in price but are cash poor.”

Multrees Investor Services chief financial officer, Keri-Ann Osfield, added: “A mansion tax may secure short-term revenue, but it risks inflicting long-term damage on the UK’s financial ecosystem.

“If affluent clients begin reassessing their UK presence, the consequences won’t stop at property values: the departure of wealth also means fewer assets managed onshore, weaker flows into UK investment platforms, and growing pressures on the myriad advisers, asset managers, family offices, and tax firms.

"These are the foundation of Britain’s wealth management ecosystem – and their erosion risks dulling the UK’s edge as a global financial hub.

“What’s needed now is long-term clarity, stable regulatory and tax frameworks, and sustained investment in the UK’s wealth management ecosystem – not a spate of ‘quick-fix’ wealth taxes that do more harm than good.”

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