Chancellor weighs higher council tax bands and lower mansion tax threshold for luxury homes

Chancellor John Healey indicated that the government is revisiting council tax policy, targeting the most valuable properties in bands F, G and H, as a relatively straightforward way to raise revenue. The Treasury’s Valuation Office Agency is updating valuations that were last set in 1991, after London house prices have surged 500 percent since then, creating a tax gap that a Resolution Foundation study says cost the capital £3.1 billion in 2024-25.

The think-tank points out that if other regions were taxed at London rates, households would effectively receive a £12.3 billion tax cut. Analysts such as Robert Salter of Blick Rothenberg call one outlet disparity inequitable and suggest that higher bills for band H (and possibly band G) homes could generate billions for local authorities. In parallel, Healey is also reviewing the mansion-tax, proposing to lower its threshold from £2 million to £1.5 million, which would more than double the number of properties subject to the levy, according to Hamptons. The surcharge, set to start in April 2028, currently ranges from £2,500 to £7,000 a year and is indexed to inflation every five years.