Autumn Budget: Mansion Tax details and exemptions revealed

The Government has confirmed that it is pressing ahead with plans for a Mansion Tax to start at the original threshold of £2million.

Chancellor John Healey’s (pictured) Autumn Budget confirmed further details of how the High Value Council Tax Surcharge will work, revealing that bills will start landing from March 2028.

An appeals process is still being worked on but the Government’s consultation response, published on October 28. Reveals a range of deferral and exemption schemes.

The tax will result in buyers thinking twice before putting in an offer on properties near or over the £2million mark.”

Households with income of £35,000 or less or capital savings of £16,000 or less, or where the property is the main home of someone who is disabled or severely mentally impaired will be able to defer until ownership of the property changes or earlier if the taxpayer chooses to settle their liability.

Further detail relating to the design and administration of the scheme, including the level of any interest applied, will be set out in regulations.

Exemptions

There will be exemptions for  purpose-built student halls of residence, care homes, long-stay hospitals accommodation and hospices, as well as barracks owned by the Ministry of Defence (MoD) predominantly for the accommodation of armed forces or those from a visiting force.

Property owned by the MoD will also get a discount , as well as homes owned by a sovereign nation for diplomats and property owned predominantly for the accommodation of those seeking refuge from domestic violence

The Government will provide a discount to owners of farmhouses, and associated farmworkers accommodation, on working farms and property owned for charitable purposes.

Mansion tax penalties

The consultation confirms a proposed penalty of 10% of the annual liability for failure to provide valuation information if asked. This may be applied if the information is not provided within 21 days of the request. This penalty may increase to 30% of the annual liability if the information is not provided after a further 21 days.

The Government also proposed allowing local authorities to contact residents, managing agents or others, whom they believe could help identify the owner of the property. However, it has not proposed any penalties where these individuals fail to provide requested information

There had been rumours that the thuesdhold could drop to £1.5million but this has not materialised.

Nigel Bishop of buying agency Recoco Property Search, says: “We applaud the decision to not lower the Mansion Tax threshold to £1.5m as it would have had crippling effects on an already stagnant property market.

“That being said, the tax will result in buyers thinking twice before putting in an offer on properties near or over the £2million mark, resulting in properties sitting on the market for longer.

“Inevitably, this will create an oversupply of properties at a higher price point and prevent homeowners from getting on with their plans such as downsizing.”