A new annual charge on England’s most expensive homes is due to start in April 2028, and the question landlords keep asking is whether they or their tenants will pay it. The government’s own consultation document answers that more clearly than the coverage suggests. Owners pay, occupiers do not. That is the proposed design rather than settled law, and the distinction matters.
The High Value Council Tax Surcharge was announced at the 2025 Budget. The government consulted on its detailed design between 19 May and 14 July 2026, and is now analysing the responses. It is not yet law, and the design can still change before it takes effect.
What the surcharge costs
The surcharge applies to residential property in England worth £2 million or more, and sits on top of existing council tax rather than replacing it. The consultation document sets out four bands:
- £2 million to £2.5 million: £2,500 a year
- £2.5 million to £3.5 million: £3,500 a year
- £3.5 million to £5 million: £5,000 a year
- Over £5 million: £7,500 a year
The government describes the target as the 1% most valuable properties in England, with the revenue supporting local government funding. The proposals apply to England only.
Banding rather than individual valuation is a deliberate choice, and it matters at the edges. A property just over a threshold pays the same as one near the top of that band, so the cost of being nudged across a line is the full step, not a proportionate increase.
Owners pay, not occupiers
This is the part worth reading carefully, because it is where Propertymark’s lobbying position and the source document diverge.
The consultation states that owners, rather than occupiers, of properties in scope will be liable to pay the charge. The legal owner, meaning a freeholder or leaseholder, is liable. Where a property has joint owners, they are jointly and severally liable.
For a property let on an ordinary tenancy, that puts the charge on the landlord. A tenant on an assured shorthold tenancy is an occupier, not an owner, and nothing in the proposed design moves the bill to them.
Propertymark has argued that landlords should not automatically be liable and has asked for owners to be able to decide whether they or their tenants pay. That is a lobbying position on a proposal that is still open, not a competing reading of what the document says. Until the government responds, the drafted position is owner liability.
Companies, trusts and long leases
Three ownership structures are addressed directly, and each will be familiar to anyone holding property at this end of the market.
Where a property is owned by a company, the company that legally owns it is liable. Holding through a corporate vehicle does not sidestep the charge, which is worth knowing for anyone whose structuring assumptions were built around buying and selling property through an SPV.
Where a property is held in trust, the government proposes that trustees are liable.
Where a property is subject to a long lease, liability sits with the leaseholder rather than the freeholder. The proposed test is a lease initially granted for more than 21 years, or one the law treats as having been granted for more than that. The reasoning given is that long leaseholders hold the substantive rights over the property. For a freeholder of a block, that distinction is the difference between one bill and none.
The valuation problem
The Valuation Office, part of HM Revenue and Customs, will run a targeted valuation exercise to identify which properties are in scope, and will keep the list current after April 2028 as homes are extended, split, demolished or built.
The practical difficulty is scale and staleness. Homes at this value often have not changed hands for years, so there is no recent transaction to anchor a figure. Propertymark has warned that automated estimates and agency appraisals are not a sound basis for imposing a charge, and that a proper inspection would be needed. Whether there is enough valuation capacity to do that before 2028 is an open question rather than a settled one.
The consultation also covers how a homeowner can challenge their banding or liability, which tells you the government expects disputes.
What this means for property investors
For most buyers this changes nothing. A £2 million threshold puts the charge well outside the range of ordinary buy to let, HMO and small block purchases, and the surcharge tops out at £7,500 a year, which is a rounding error against a £5 million asset.
It matters in three specific places. If you hold high value single dwellings in England, price an extra £2,500 to £7,500 a year into holding costs from April 2028, and price it per dwelling rather than per building. If you are a freeholder with long leaseholders, read the 21 year test carefully, because the proposed liability sits with them and not with you. And if you are buying anything near £2 million, the banding thresholds are now a negotiating fact: crossing £2 million adds a permanent annual cost that a valuation just under it avoids entirely.
One caution. This is a consultation that has closed, not legislation that has passed. The government has not yet published its response, and the bands, the definitions and the start date can all move. Treat the numbers above as the proposed design, and check the position again before you rely on it in an underwriting model. The same discipline applies to capital gains tax on property, where the distinction between announced, legislated and in force does most of the work.
If you want deals underwritten against current tax reality rather than assumptions, browse our current stock.