In today’s Budget, Chancellor Rachel Reeves announced a series of tax changes aimed at landlords and wealthy homeowners.
Changes to tax on income from properties will come in from April 2027, while a new high-value council tax surcharge, or ‘mansion tax’, will apply from April 2028.
Read on to find out how the changes will affect property owners, and how the new ‘mansion tax’ will work in practice.
New ‘mansion tax’ coming in April 2028
The Chancellor announced that a new annual property tax will launch, with bills based on the current value of a home, called a high-value council tax surcharge (HVCTS). This will apply only to properties in England.
The new surcharge will apply to properties valued at more than £2m, which the government estimates will affect fewer than 1% of properties in England.
Unlike last year’s Budget, when some tax changes were implemented instantly, the new surcharge will be introduced from April 2028. The government will conduct a public consultation on specific details of the new tax in early 2026.
The current council tax system in England and Scotland is based on valuations from 1991, when the average home cost roughly £52,000. The latest Land Registry data shows that the average UK home costs almost £272,000.
Wales uses 2003 property values, although the Welsh government has announced its own reforms to the system from 2028.
Council tax is currently divided into bands (A to H in England), with charges set by local authorities. In 2024-25, the average Band D council tax bill in England was £2,171.
The outdated banding means some households in less valuable homes pay proportionally more than those in higher-value properties, which the new surcharge aims to address.
- Find out more: council tax calculator 2025-26
How will the ‘mansion tax’ work?
Properties valued at more than £2m will owe £2,500 a year, rising to £7,500 a year for properties valued at more than £5m.
The Chancellor confirmed that the high-value council tax surcharge will be owed by the property owner rather than the occupier, and will be collected alongside council tax.
Homes will be charged based on 2026 property prices. Charges will increase by CPI inflation each year from 2029-30 onwards, and the thresholds will be reviewed every five years.
The table shows the charging structure of the new surcharge.
Property income tax rise for landlords
The Chancellor also announced today that the tax rates on income from property will rise by two percentage points.
From April 2027, the increase will apply to basic, higher and additional rates of property income tax in England, Wales and Northern Ireland.
The table shows the new tax rates.
Scotland applies different income tax rates from the rest of the UK, and so is unaffected by today’s announcement. However, this could change in the Scottish Budget, which is scheduled for 13 January.
- Find out more: Budget 2025: all the key announcements
What wasn’t in the Autumn Budget?
First-time buyer schemes
Today’s Budget focused on tax rises for the most valuable homes and income made from property.
The Chancellor didn’t announce any new schemes or initiatives directly designed to help first-time buyers get on the housing ladder. However, the government will publish a consultation in early 2026 ‘on the implementation of a new, simpler Isa product to support first-time buyers to buy a home’.
It stated that this new product will replace the Lifetime Isa.
Stamp duty changes
In the weeks leading up to the Budget, there were rumours of changes to stamp duty or a shift in who pays it, moving from the buyer to the seller. It was suggested that this change could help first-time buyers with affordability.
However, no such changes were announced by the Chancellor. Stamp duty thresholds remain the same.
For the full details of thresholds and rates in England, Wales, Scotland and Northern Ireland, head to our stamp duty calculator.