Mansion Tax Consultation Closes 14 July: The £1.5m Rumour and a Shrinking Tax Base

The High Value Council Tax Surcharge, widely nicknamed the mansion tax, was announced at the Autumn Budget 2025. On 19 May 2026 the Ministry of Housing, Communities and Local Government, working with HM Treasury and the Valuation Office Agency, opened an eight-week consultation on how the tax should actually work. It closes on 14 July 2026.

The headline parameters are already fixed. Homes in England valued at £2 million or more in 2026 will pay an annual surcharge from April 2028, collected alongside council tax but with the revenue going to the Treasury rather than local authorities. The charges are uprated each year with CPI inflation, and the Government forecasts around £430 million of revenue in 2028-29.

What the consultation is deciding is the plumbing, and much of it matters more than it sounds:

• Who is liable: the owner rather than the occupier, but the consultation asks how that should apply to leaseholders, trustees and company-owned homes.
• Deferral: asset-rich, income-poor owners could postpone payment until the property is sold. The proposed tests are an income threshold of £35,000 and a capital threshold of £16,000, with disability-based eligibility also on the table.
• Payment: twelve monthly instalments by default, with a ten-payment option to mirror council tax.
• Valuation: the Valuation Office Agency will run a targeted valuation exercise using automated valuation models checked by professional valuers, placing each home into one of the four bands based on its 2026 value. Revaluation follows every five years, with the first scheduled for 2033.
• Exemptions and appeals: candidates include student accommodation, armed forces housing and social housing, plus the process for challenging a banding through the Valuation Tribunal.

We covered what the tax is expected to cost the Treasury before it raises anything in our analysis of the £400m mansion tax cost leak.

Buried in the consultation is a question with a familiar shape: should non-UK resident owners of liable homes pay an additional premium on top of the surcharge? The Government says it wants to understand whether demand from non-resident owners is contributing to pressure on housing availability and prices, which points squarely at prime London.

If that sounds familiar, it is because stamp duty already works this way. Non-UK residents have paid a 2% SDLT surcharge on residential purchases since April 2021. A non-resident premium on the mansion tax would extend the same logic from the point of purchase to every year of ownership.

Nothing is decided. The consultation only asks whether the idea should be explored further, and any premium would need its own design work on residence tests and enforcement.

While the consultation runs, the politics have moved. In early July the Mail on Sunday reported that Andy Burnham, the Greater Manchester mayor widely discussed as a potential Labour leadership contender, could lower the mansion tax threshold from £2 million to £1.5 million. It is speculation about a politician who does not currently set tax policy, but it was taken seriously enough for tax analysts to run the numbers.

Tax Policy Associates, the think tank run by Dan Neidle, published its analysis on 7 July 2026. On its estimates, the tax as announced catches around 127,000 homes. Cutting the threshold to £1.5 million would add roughly 150,000 more, nearly doubling the number of liable households to around 243,000.

The revenue arithmetic is less generous than the household count suggests. Simply adding a £1.5 million band at the existing £2,500 charge would not raise much extra. To get towards £800 million a year, the charges on the existing bands would all need to rise as well. And the geography is stark: the tax is overwhelmingly a London and South East levy. On TPA's figures, residents of Camden alone would pay more mansion tax than everyone in the Midlands and the North combined, while Burnham's own Greater Manchester would account for around 1% of liable homes, roughly 2,400 properties.

For homeowners near the threshold, the practical takeaway is that the £2 million line is a political variable, not a settled fact. Anyone modelling a purchase or sale around it should treat the current bands as provisional until legislation passes.

There is a further complication for the Treasury: the pool of homes the tax is aimed at is getting smaller. Prime property values have drifted down since the tax was announced, partly in response to the announcement itself. Analysis tracked by the HomeOwners Alliance suggests roughly 8,800 fewer properties sat above the £2 million mark by July 2026 than at the time of the November 2025 Budget.

That matters for two reasons. First, revenue: fewer liable homes means less money, on top of the transactional drag we covered in the Treasury cost leak analysis, where officials expected £215 million of stamp duty to disappear before 2028 as the top of the market slows. Second, valuation: the tax will be based on 2026 values assessed by the Valuation Office Agency, so a home that has slipped below £2 million by the valuation date escapes entirely, while one just above it is locked in until the 2033 revaluation.

A shrinking base is also one more argument, from the Treasury's side, for the kind of threshold cut floated in the Burnham report. If receipts undershoot, widening the net is the obvious lever.

Once the consultation closes on 14 July, the Government will analyse responses and publish a formal response, expected later in 2026. Legislation has to be in place well before the April 2028 start date, and the Housing Committee's call for a stamp duty consultation by the end of 2026 means property tax will stay on the agenda through the Autumn Budget.

None of this changes what buyers pay today. The mansion tax is an annual ownership charge, not a transaction tax, and stamp duty rates remain exactly as set in April 2025. We will update this page when the Government publishes its consultation response.