Cotswold families need to ensure they understand how the proposed “Mansion Tax” will impact them, tax experts at national audit, tax, advisory and consulting firm Crowe are warning.

Nick Latimer, tax partner at Crowe’s Cheltenham office, said Gloucestershire and the wider Cotswolds area would be disproportionately affected by the tax, due to the region’s popularity and higher property prices.

“HMRC has recently published a consultation on the design of the High Value Council Tax, otherwise known as the mansion tax. 

“As announced at the 2025 Autumn Budget, the surcharge will be payable by the legal owner of a dwelling valued at £2 million or more and will be in addition to the standard council tax charges.

“While the Government has considered applying the surcharge to beneficial owners of dwellings, it has been determined that they do not see this as a possible approach due to there being no extensive record of beneficial owners of UK dwellings for local authorities to administer the charges.”

Properties will be placed in one of four bands, with the proposed annual charges in four bands.

Homes worth £2-2.5 million will pay an annual rate of £2,500, from £2.5-£3.5 million – £3,500, from £3.5-£5 million – £5,000, and for properties valued at £5 million plus, £7,500.

Latimer said: “Valuations will be based on the market value of a property in 2026, with revaluations proposed to take place every five years. These will be carried out by the Valuation Office, which is currently undertaking this exercise.”

A number of exemptions will be made available for certain residential properties, including purpose-built halls of residence, property owned by a sovereign nation, property owned by a registered social housing provider and care homes.

Newly built properties owned by developers will also benefit from an exemption or discount until the earlier of the first sale or 12 months after practical completion. 

Latimer added: “Given the proposed banding structure, it is anticipated that many valuations, particularly those close to the band thresholds, will be contested by property owners.

“It has been proposed that homeowners will have the opportunity to submit a challenge to the body making the relevant valuation decision.

“However, even if a challenge is submitted, the Government has stated that homeowners will remain liable for the tax, with repayments or liabilities amended, only once a decision on the challenge is reached.

“The proposed High Value Council Tax Surcharge has been positioned as a straightforward, banded annual charge. The consultation illustrates that its application is likely to be more nuanced, with complexity emerging particularly in relation to valuations, ownership structures and the operation of the deferral regime.”

While further detail is expected following the consultation, Crowe is recommending that affected homeowners, trustees and corporate property owners should begin assessing their potential exposure and consider the impact on liquidity, particularly where properties are high in value but do not generate income.

Latimer said: “Further consideration will be required to ensure the regime does not unintentionally bring properties into scope simply because it is aimed at targeting wealth.”

For further information or to discuss your specific circumstances, contact nick.latimer@crowe.co.uk or call 01242 234421.