The High Value Council Tax Surcharge – what it is and why it matters

Based on the information available so far, the amount payable will be between £2,500 and £7,500 per year, depending on the value of the property. The charge will increase in line with inflation each year and will be subject to reliefs and exemptions. The government intends to consult on the mechanics of the new surcharge, including on how to provide support to those who may struggle to pay it, in 2026. 

For ICAEW members advising clients in residential real estate, private wealth, development or local government finance, the surcharge represents a significant shift. It introduces a new recurring liability, establishes a fresh valuation regime and, in some cases, prompts conversations about fairness and transparency.

The HVCTS introduces a parallel system to existing council tax, with several design features relevant for advisers:

The Valuation Office Agency (VOA) will undertake a targeted valuation programme to identify properties expected to exceed the £2 million threshold. These valuations will be refreshed every five years. Whilst this approach brings predictability, it also risks creating a mismatch between tax bills and real-time market movements, particularly in areas where values rise or fall sharply.

Liability will rest with homeowners rather than occupiers, aligning the surcharge with ownership rather than occupation. Local authorities will collect the charge in the usual way, but revenues will accrue to central government.

From 2030, the surcharge will rise in line with CPI. In practical terms, owners may see the cost increase even if property prices don’t go up.

Taken together, these features create a system that is locally administered but centrally driven, and one in which timing and valuation evidence will matter.

Analysis, using the Sprift Automated Valuation Model and whole-of-market datasets across 294 English local authorities and covering roughly 25.4 million dwellings, indicates that approximately 182,700 properties fall above the £2 million threshold. But the distribution is far from even.

1. Central London dominates: Westminster and Kensington & Chelsea together contain around 50,000 properties over £2 million, representing almost 28% of the entire national total
2. A small group of affluent areas hold most of the tax base: the top 10 local authorities – comprising high-value central and suburban London boroughs, plus Buckinghamshire – account for around 60% of all £2m+ properties
3. Many parts of the country see almost none: the median local authority has around 33 qualifying properties, and three-quarters have fewer than 300. Across large parts of the midlands, the north and many coastal regions, £2m+ homes are rare or entirely absent.

This uneven geography means that, although the surcharge applies nationally, most of the taxable properties are clustered in just a few areas. Those authorities will feel the effects most strongly, both in local effort required and in how their property markets respond.

On Budget Day, around 4,900 properties were listed for sale at £2 million or above across England. In the median local authority, there were only two such listings, underscoring the niche nature of the market outside London and a few hotspots.

Approximately one in every 45 £2m+ homes is currently on the market and the top local 10 authorities account for around 55% of all high-value listings.

For valuation, advisory and lending professionals, a few points stand out:

• Five-year valuation cycles can create mismatches in fast-moving markets. Sudden price rises or falls won’t be reflected in tax liabilities until the next revaluation.
• Automated valuation tools now update much more frequently, which could support transparency, dispute resolution or provide additional evidence where needed
• Material Information regulations may require sellers and agents to disclose potential future tax changes, particularly if these could influence buyer decisions

Areas with more fluid high-value markets – such as Bournemouth, Christchurch and Poole – may experience pricing and negotiation adjustments earlier as the policy timetable becomes clearer.

The HVCTS will affect a wide range of clients and professional workflows. Key considerations include:

• Modelling the medium to long-term cost of ownership, factoring in CPI-linked uprating
• Considering how the surcharge interacts with estate planning or ownership structures
• Ensuring disclosures under Material Information rules are robust, especially for properties close to the £2 million mark

• Understanding exposure in markets with high concentrations of £2m+ stock
• Stress-testing development pipelines or lending portfolios where the surcharge could influence demand or valuations
• Ensuring market appraisals explicitly account for the surcharge in affected areas

• Even though revenues flow to central government, the concentration of taxable properties in a handful of authorities may inform future conversations about funding, equalisation and perceived fairness

• Preparing clients for VOA assessments and potential challenges
• Using AVM insights and market evidence to support valuation reviews, especially in heterogeneous or rapidly shifting markets

The High Value Council Tax Surcharge introduces a new, nationally applied but geographically uneven tax on residential property ownership in England.

Its concentrated tax base, reliance on cyclical valuations and interaction with broader housing-market dynamics mean that accountants will play a central role in helping clients navigate compliance, cost planning and strategic decision-making.

As the implementation details develop, professionals across real estate, private wealth, development and local government finance will play a central role in helping clients understand their exposure, prepare for 2026 valuations and manage the practical implications.

The HVCTS represents more than a simple surcharge: it reshapes the landscape of high-value property ownership. Moving forward, ICAEW members will play a key role in helping clients understand the rules, plan ahead and respond to the wider market effects.

^{*the views expressed are the author's and not ICAEW's}