Emma Sear
- Partner
- Residential Property
Considering a prime residential property in England? Here’s what you need to know about Stamp Duty Land Tax and the new High Value Council Tax Surcharge
If you are considering buying a residential property in England valued at £2 million or more, it is important to understand the new high value council tax surcharge (HVCTS) – often referred to as the “mansion tax” announced in the UK Government’s Budget on 26 November 2025. This is in addition to existing stamp duty land tax (SDLT) rules, which already impose higher rates for overseas buyers.
High Value Council Tax Surcharge
For many years, the UK stood apart from our European neighbours by not imposing an annual property tax beyond standard council tax. While speculation about a “mansion tax” has circulated for many years, it never materialised – until now.
In reality, the HVCTS is less punitive than many feared but it will still impact owners of high-value homes. If you are investing in property in England or reviewing your existing property holdings, this surcharge needs to be factored into your planning.
How much will you pay?
The surcharge applies to properties valued at £2 million or more with four bands as follows.
| Property value | Annual Surcharge |
| £2.0m – £2.5m | £2,500 |
| £2.5m – £3.5m | £3,500 |
| £3.5m – £5.0m | £5,000 |
| £5m + | £7,500 |
The HVCTS will rise annually in line with the Consumer Prices Index (CPI) and properties will be revalued every five years by the Valuation Office.
How does it affect overseas investors?
The HVCTS is payable in addition to council tax and SDLT (including the SDLT surcharge for non-residents). Importantly, where a property is let, the HVCTS is payable by the owner, not the tenant. For buy-to-let investors, this annual cost could affect net returns and should be factored into rental yield calculations. Owners may wish to review their existing ownership structures and financing arrangements in light of this recurring charge.
Stamp Duty Land Tax
SDLT is charged on (broadly) the purchase price of a property in England. Following years of temporary bands, holiday rates and short‑term incentives, we are now looking at a return to a more predictable SDLT framework.
How much will you pay?
For residential properties, SDLT rates can be higher where a person owns another home anywhere in the world, or is not resident in the UK.
| Band | Rate | Additional home rate | Non-UK resident purchaser rate |
| 0–£250,000 | 0% | +5% | +2% |
| £250,001–£925,000 | 5% | +5% | +2% |
| £925,001–£1.5m | 10% | +5% | +2% |
| Over £1.5m | 12% | +5% | +2% |
Lower rates apply to homes that contain a mixture of residential and non-residential property, such as some landed estates, or homes combined with business premises. Care should be taken to consider whether these lower rates can in fact apply, as this area is complex.
| Band | Rate |
| 0–£150,000 | 0% |
| £150,001 to £250,000 | 2% |
| £250,001 + | 5% |
How does it affect overseas investors?
For properties that are sufficiently non-residential, SDLT rates of up to 5% apply to the entire transaction and the purchaser being non-UK resident has no impact.
For residential properties, the 2% additional rate for non-UK residents will apply if an investor has spent at least six of the twelve months leading up to the purchase outside the UK.
If a person is moving to the UK, the 2% additional rate can be refunded after buying the property, provided certain conditions are met.
If a person sells their non-UK home within three years of purchasing their UK property, the 5% additional home rate can also be refunded.
If a non-UK company or non-UK discretionary trust is purchasing a residential property worth over £500,000 that is not intended to be let out to an unconnected third party, an SDLT flat rate of 17% along with the 2% additional rate for non-UK residents can apply, giving a 19% overall rate. Some UK companies can come within this or a similar flat rate, if they are controlled by non-UK residents.
Planning ahead
The HVCTS will not come into force until 6 April 2028, allowing time for public consultations and for properties in the top three council tax bands across the country to be revalued. It may be possible to appeal the valuation where a property is valued at or just above a relevant threshold.
While the HVCTS is modest compared to property taxes in some European countries, it signals a shift in the UK’s approach to high-value homes.
Depending on the purchaser and the property, other taxes to those mentioned in this article can be relevant.
Overseas investors should review their existing holdings, factor the tax position into purchasing budgets and seek professional advice on valuations and ownership structures.
For further information please contact Emma Sear, Andrew McIntyre or another member of the Private Client Group.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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Andrew McIntyre
- Senior Associate
- Private Client
