Last updated: 14 October 2026
Is there a proportional property tax on homes worth over £500,000?
No. In 2025 there were press reports that the Treasury was considering a “proportional property tax” on homes worth more than £500,000, possibly replacing Stamp Duty Land Tax and council tax. It wasn’t introduced. What the government did announce at Budget 2025 is a High Value Council Tax Surcharge (HVCTS) on homes in England worth £2 million or more, starting in April 2028. Stamp Duty and normal council tax carry on as before.
What was actually announced
| Measure | Detail | Starts |
| High Value Council Tax Surcharge | Annual charge on homes in England worth £2 million or more, by 2026 valuation | April 2028 |
| Property income tax rates | 22%, 42% and 47% on rental profits | 6 April 2027 |
| Savings income tax rates | 22%, 42% and 47% | 6 April 2027 |
| Stamp Duty Land Tax | No change to rates and bands | — |
| Council tax bands | No change; still based on 1991 values in England | — |
HVCTS bands
| Property value (2026) | Annual charge |
| £2 million to £2.5 million | £2,500 |
| £2.5 million to £3.5 million | £3,500 |
| £3.5 million to £5 million | £5,000 |
| Over £5 million | £7,500 |
Charges are set to rise with inflation from 2029/30. The Valuation Office Agency will value the properties likely to be affected. The charge falls on owners, not tenants, unlike normal council tax.
What it means for landlords
For most landlords, the bigger change is the new property income rates from April 2027. A higher-rate landlord with £20,000 of rental profit will pay 42% instead of 40%, so £400 more a year. Mortgage interest relief stays as a basic-rate tax credit, which is due to be given at the new property basic rate of 22%. Landlords with properties over £2 million in England will also face the HVCTS as owners.
Example
A landlord owns a London house worth £2.6 million, let to tenants. From April 2028, the landlord pays a £3,500 annual surcharge, on top of the council tax paid by the tenant. Whether this cost is deductible from rental profits will depend on the final rules, so check before claiming it.
Why a proportional tax was floated
Council tax in England still uses 1991 values, so a £3 million home can pay little more than a £600,000 home in the top band. A proportional tax would have charged a percentage of current value instead. The government chose a narrower surcharge on the most valuable homes rather than a full reform, so most homeowners see no change.
Planning points
- Check your property’s likely value against the £2 million threshold
- Model your rental profits at the 2027 rates
- Review whether holding property in a company makes sense, taking advice on SDLT and CGT costs
- Make sure you claim all allowable expenses
Frequently asked questions
Does the surcharge apply in Scotland or Wales?
It’s for England only.
Will council tax be revalued?
Not as part of this measure.
Can I defer the surcharge?
The consultation proposed deferral for some households.
Did SDLT change for £500,000 homes?
No, the rates set from April 2025 still apply.
Related: why landlords may pay more tax, SDLT rates and reducing your council tax bill.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with property tax planning. See our landlord accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
