The council tax surcharge on £2 million homes

Reacting to

£1.5m mansion tax ruled out, but the £2m grey zone remains (Accountancy Age, 13 October 2026)

A new council tax surcharge on homes worth £2 million or more is due to start in April 2028. Reports last month suggested the entry point might drop to £1.5 million, pulling in well over a hundred thousand more homes. Accountancy Age reported this week that ministers have ruled that out. The line stays at £2 million, which is enough reason on its own to work out which clients it touches, and what else about their finances sits near the same number.

What has and has not been confirmed

Accountancy Age's reporting, 13 October 2026, two weeks before the 28 October Budget:

134,000

English homes at or above the £2 million threshold as it stands, based on figures Accountancy Age attributed to The Times.

271,000

homes that would have been drawn in had the threshold dropped to £1.5 million instead, around half of them in London.

73,600

homes in the £1.8m–£2.2m band, Knight Frank's estimate of the immediate exposure zone around the confirmed line.

£2,500–£7,500

the proposed annual surcharge, in four bands running from £2m to £5m and above, on top of standard council tax.

Figures reported by Accountancy Age, 13 October 2026, attributed to The Times, Yopa and Knight Frank research, and government consultation documents

The Treasury has not formally confirmed its position ahead of the Budget, and the surcharge itself is still subject to the consultation that closed in July. What is settled, for now, is the £2 million entry point and the four bands above it. Valuation will be carried out by the Valuation Office Agency, using automated valuation models alongside comparable sales evidence and professional valuer oversight, which is where the £1.8m–£2.2m band becomes the practical question for anyone advising a client near it.

A valuation question the accountant may already be asking

A home's value does not sit on a tax return. But an accountant working on inheritance tax planning for a client already has reason to know roughly what the client's estate is worth, because the residence nil-rate band starts to taper once an estate passes £2 million, losing £1 of the band for every £2 above that line. Add savings and other assets to a main home valued between £1.8 million and £2.2 million, and a client's total estate can easily sit close to that taper threshold too.

That means the same independent, dated valuation evidence a client needs to support a council tax band, if the Valuation Office Agency's automated model gets it wrong, is also evidence the accountant needs for the inheritance tax position. One instruction to a RICS valuer can serve both questions at once. Commissioned separately, the same evidence gets paid for twice, a year or two apart.

An adviser and a client talking across a table

Accountancy Age, 13 October 2026: "For accountants advising asset-rich clients, the brief media flurry serves as a sharp reminder of how sensitive property tax planning has become."

A worked example

This example uses a made-up client and made-up figures.

The example is a couple who jointly own their home, valued by the agent who sold them a neighbouring property last year at around £2.1 million. Their accountant has prepared their joint tax affairs for some years and knows, from an inheritance tax conversation two years ago, that their combined estate including savings and a buy-to-let flat comes to roughly £2.3 million. The council tax surcharge, once it starts in 2028, would sit at £2,500 a year on a £2.1 million valuation. The same £2.3 million estate figure means their residence nil-rate band has already started to taper: £175,000 reduced by £1 for every £2 over £2 million, a fall of around £150,000 in the band available against their estate.

The two £2 million questions

Made-up client and made-up figures

Home valuation (agent estimate)£2,100,000

Council tax surcharge from April 2028, at this valuation£2,500 a year

Combined estate (home, savings, buy-to-let flat)£2,300,000

Residence nil-rate band lost to tapering~£150,000

Neither figure changes what the other one is. But a couple who only ever discuss the surcharge with their accountant, and the inheritance tax taper with no one, are having half a conversation about the same valuation. Whether the right response is a RICS valuation to challenge an automated council tax banding, a review of how the estate is structured to limit the taper, or both, is not a question the accounts alone can settle.

Accountancy work

Noticing that a client's home value, or their last discussed estate figure, sits near £2 million is ordinary professional knowledge about a file the firm already holds.

Regulated advice

Working out whether the surcharge, the residence nil-rate band taper, or both apply, and what a client's income and savings can absorb, is work for the Equity & General financial planner.

The division is set out in who does what. The other things a return or a set of accounts can show are set out in what to look for in the accounts.

Two things to do this week

List clients whose home, or whose last discussed estate figure, sits between £1.8 million and £2.2 million. That list will not come from Companies House or Client Watch. It comes from the file: a self-assessment return, probate or inheritance tax work already done, or a conversation about a house sale.
Ask whether an independent valuation would help. A client near the line gets the same evidence whether the question is a council tax banding challenge in 2028 or an inheritance tax taper calculation today. Getting it once, with a RICS valuer, answers both.

What is not yet settled

The Treasury has not formally confirmed the £2 million threshold or the four surcharge bands ahead of the 28 October Budget, and the detail of how the proposed deferral option for cash-poor owners would work has not been published beyond the consultation documents Accountancy Age describes. The Valuation Office Agency has not set out how it will handle a property near a band boundary where its automated model and an independent valuation disagree. Anything beyond the figures above should wait for the Budget and the Treasury's formal response to the consultation.

Common questions

What is the high value council tax surcharge?

It is an annual surcharge on top of standard council tax for homes valued above £2 million, due to take effect in April 2028 once government consultations close. Accountancy Age reported on 13 October 2026 that the four proposed bands run from £2,500 a year for a home between £2 million and £2.5 million, up to £7,500 a year for a home worth £5 million or more. Around 134,000 English homes currently sit at or above the £2 million line, based on figures Accountancy Age attributed to The Times. The Valuation Office Agency will value properties using automated models, comparable sales evidence and professional valuer oversight, and the Treasury has not formally confirmed the detail ahead of the 28 October Budget.

Why does the £1.5 million threshold matter if it has been ruled out?

Reports last month suggested the Treasury was weighing a lower £1.5 million entry point, which would have raised the number of affected English homes from roughly 134,000 to an estimated 271,000, around half of them in London, according to The Times figures cited by Accountancy Age on 13 October 2026. Ministers have since ruled that out and kept the line at £2 million. The episode matters because it showed how quickly the scope of this tax can move. An accountant who had already identified the relevant properties was ready for either outcome. One who had not was working from the headline alone.

Which clients are most exposed to this surcharge?

Knight Frank research, reported by Accountancy Age on 13 October 2026, puts 73,600 homes in the £1.8 million to £2.2 million valuation band around the confirmed £2 million line. A client whose main residence falls in that range is the one most likely to be pulled into the surcharge, or kept out of it, depending on exactly how the Valuation Office Agency bands the property when formal assessments begin. Add savings and other assets to a home in that range, and a client's total estate can sit near the £2 million mark at which the inheritance tax residence nil-rate band starts to taper. That makes the surcharge one of two tax questions the same valuation can answer.

Can a client avoid the surcharge by transferring part of the property?

No. Accountancy Age reported on 13 October 2026 that the surcharge attaches to the market value of the residential dwelling itself, not to individual equity shares in it, so splitting title deeds or transferring partial ownership does not reduce the valuation the surcharge is based on. Restructuring a property purely to move it under the threshold risks triggering a capital gains tax or stamp duty land tax charge in its own right. Any client asking about this needs a clear, accurate answer on what the surcharge does and does not respond to.

Is there any help for a client who cannot easily pay the surcharge in cash?

Accountancy Age reported on 13 October 2026 that government consultation documents propose a deferral option for owners with limited income, so a client who is asset-rich but cash-poor would not necessarily have to find £2,500 to £7,500 a year from income alone. The detail of how a deferral would work, and who would qualify, has not been set out beyond that proposal. Whether deferral suits a particular client depends on their wider income, savings and retirement plans. That is a question for the Equity & General financial planner working alongside the accountant.