Thousands more homeowners could face the government’s new mansion tax if ministers lower the proposed threshold from £2m to £1.5m.
The High Value Council Tax Surcharge (HVCTS) is due to start in April 2028. Under current plans, it will apply to homes in England worth at least £2m.
However, reports suggest ministers are considering cutting the entry point to £1.5m.
Such a move would widen the tax net significantly. London and the South East would be particularly exposed.
Until recently, rising mortgage rates had been the main concern for the housing market. The Middle East conflict has increased pressure on borrowing costs and inflation.
Meanwhile, the pre-Budget speculation that unsettled buyers and sellers last year had been relatively subdued.
That changed over the weekend following reports of a possible £1.5m threshold.
Speculation about a potential increase in Capital Gains Tax has also resurfaced.
For now, the government’s confirmed policy remains unchanged. Annual HVCTS charges are set to range from £2,500 to £7,500 under the existing proposals.
‘Government would be widening the tax net’
Tom Bill, head of UK residential research at Knight Frank, warned that a lower threshold would cause concern in higher-value markets.
He said: “The proposal to drop the lower threshold for the HVCT will cause concern in outer London boroughs and parts of south-east England in particular.
“Anyone in a home whose value could reach seven figures in the next several years must wonder if they will be next. If the current speculation proves accurate, the government would be widening the tax net before the measure has even been introduced.”
Bill also expects the tax bands to influence negotiations between buyers and sellers.
He added: “Whatever bands are used, it will inevitably lead to more pointed negotiations between buyers and sellers and bunching below price thresholds, creating the sort of distortions that existed under the stamp duty slab system.”
Impact on moving decisions
The tax could also influence decisions about moving home.
Some buyers may think twice about trading up. Conversely, existing owners could decide to downsize to avoid the surcharge.
Bill said: “It may discourage up-sizers but could have the opposite effect on downsizers as homeowners seek to avoid paying higher charges.
“That could lead to headlines about asset-rich and cash-poor elderly individuals being forced to move from neighbourhoods they grew up in, which may be a political trade-off the current administration is prepared to make.”
The government has acknowledged concerns about homeowners with valuable properties but limited incomes. Its consultation includes proposals allowing some owners to defer payments.
Valuation headache could treble
A £1.5m threshold could also create a much bigger challenge for valuers.
Knight Frank estimates that 73,600 properties are worth between £1.8m and £2.2m. This represents the valuation “grey area” around the proposed £2m threshold.
Bill said: “Initially, the thresholds will also present a problem for valuers, especially if the entry point drops to £1.5 million.
“Knight Frank estimates there are 73,600 properties worth between £1.8 million and £2.2 million, which is the valuation grey area either side of the proposed bottom threshold.
“If that dropped to £1.5 million, the grey area would expand to 222,800 properties, trebling the size of the valuation headache.”
The Valuation Office Agency will carry out valuations under the existing proposals. Qualifying properties will then be placed into one of four bands.
The £1.5m threshold remains speculation. The government’s published policy still sets the starting point at £2m from April 2028.
Comments (3)
When you discourage people to improve their lives and inspiration you generate less tax. Import cheap or non working people as is happening the result is Everyone is poorer. This government needs to be removed.
Did you read the actual numbers below?
Somebody who is worth millions of pounds is not going to worry the slightest for £20 per day extra on their bills. There is no disincentive there.
Likewise, at the bottom end of the mega-wealthy scale, the cost per day is only £6.84 – that’s less than two flat whites at Starbucks.
It is an extra cost, I grant you, but it really is peanuts and will help the rest of the country get buy.
The super-wealthy can afford to help out, and they should feel proud to do so.
Did you know that the majority of money given to charitable causes, is donated by those in society that have lower to middle incomes?
Do you know why? Because they understand how much just a little can help sometimes.
Getting rid of a government that is trying to set right the serious imbalance between the rich and the poor that exists in this country would be a poor decision.
Fear, doubt and uncertainty, or how to make the average member of the general population vote for something that will make the rich even richer still. Or perhaps, stop them paying their fair share…
In January 2022, the House Price Index for all properties in England was at 94.50. The average value of the average property transaction was £270,23. July 2026 its at 102.70 with an average value of £293,479.
According to gov.uk there are 16.2 million properties in England that are owner occupied and a further 4.7 million that are privately rented. That makes 20.9 million properties that are owned by individuals. I can’t see data on “holding companies”, which due to previous tax breaks will probably own the more expensive properties owned by the super rich.
Zoopla estimated in 2025 that only 160,000 residential properties were valued at £2 million or more. That’s 0.76% of the housing stock. Savills stated in February this year that approx. 673,000 were valued at more than £1 million. That’s 3.22% of the housing stock.
Ministers are thinking of reducing the threshold from £2m to £1.5m.
For the average man in the street with their average salary and their average home, dropping the threshold means nothing at all, because it will NEVER affect them.
However, if you can promote the “It could be you!” propaganda to the masses, then hopefully you will get enough people to vote against it.
If you can afford to buy and then keep up a house that is valued at 5 times the national average value, then I guarantee that you can afford to pay that little bit more to help society run more smoothly.
A brand new bottom of the range base model Porsche Cayenne costs about £850 per month on PCP, that’s just under £28 per day.
You don’t NEED one of those. You could opt for a perfectly decent top of the range Kia or equivalent for half the money.
Everyone with a salary below £100,000 can safely ignore the article.
Those with joint salaries in the region of £300,000 who might already own a property that could be affected, the rest of society would like to thank you for your ongoing contribution to society. We appreciate you.