Properties worth more than 2m face new tax

"The annual charge will come on top of existing council tax, and will increase depending on the price of a property - with four separate bands. These will go from the lowest band of 2m to 2.5m, with the highest for those valued at 5bn or more, who will pay 7,500 a year - with the bulk of all the properties affected based in London."

"In its assessment released in error ahead of the Budget, the Office for Budget Responsibility (OBR) expects the measure to raise about 400m a year by 2029-2030. The charge on properties valued at more than 2m is part of a range of tax rises included in Rachel Reeves' Budget to allow her to meet her own self-imposed financial rules. While the charge is imposed on top of existing council tax, but rather than going to the local authority, will go the the Treasury."

"the OBR said it expected the tax would begin to be reflected in the price of properties, with "price bunching to just below each band boundary". This refers to the incentive to value a property just below the price at which it would become liable for the charge - something which "reduces the estimated yield by reducing the number of properties in scope of the measure". The band at which properties will become liable for the charge will increase in line with inflation."

Owners of tens of thousands of properties in England valued above 2m will be charged an annual surcharge from 2028, payable to the Treasury on top of existing council tax. The surcharge will have four bands, starting at properties valued 2m to 2.5m (minimum 2,500) and rising to 7,500 for properties valued at 5bn or more, with most affected properties in London. The Office for Budget Responsibility estimated the measure could raise about 400m a year by 2029-2030 but said the costings had a high degree of uncertainty. Properties will be assessed using 2026 valuations and bands will increase with inflation. Price bunching below band boundaries is expected.

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