Thousands more homeowners could be subject to the government's new mansion tax if the proposed threshold is lowered from £2m to £1.5m. The High Value Council Tax Surcharge (HVCTS) is scheduled to begin in April 2028, currently applying to homes in England valued at £2m or more.
However, reports suggest ministers are considering reducing this entry point to £1.5m. Such a change would significantly expand the tax's reach, particularly impacting London and the South East.
Tom Bill, head of UK residential research at Knight Frank, stated that a lower threshold would cause concern in higher-value markets, especially in outer London boroughs and parts of south-east England. He also expects the tax bands to influence negotiations between buyers and sellers.
The potential tax could also affect moving decisions, possibly discouraging those looking to upsize while encouraging downsizers seeking to avoid higher charges. The government has acknowledged concerns regarding homeowners with valuable properties but limited incomes, with its consultation including proposals for payment deferrals.
A £1.5m threshold could also increase the challenge for property valuers. Knight Frank estimates that if the threshold dropped to £1.5m, the number of properties in the valuation "grey area" could treble to 222,800. The Valuation Office Agency is set to carry out valuations under the existing proposals, placing qualifying properties into one of four bands.
The government's confirmed policy currently remains unchanged, with the starting point for the HVCTS set at £2m from April 2028.