Government launches council tax shake-up in bid to raise extra £430million a year

The government has said council tax has remained untouched for decades and has not been readjusted as property values increase

The Government has announced it is taking the first steps in Council Tax shake-up to boost Treasury coffers by £430m a year. Council tax has remained untouched for decades and has not been readjusted as property values increase which means some people are paying far more for their homes than others in bigger properties.

Now it has launched an eight-week consultation on the details of the new High Value Council Tax Surcharge, which is says is aimed at making the system fairer for households. It will seek views on a range of issues including the scope of the tax surcharge, the billing process, how the system will be run and how people can appeal.

The government says under the proposals, announced at Budget 2025, those with the 1% most valuable properties will “pay their fair share”. It says the money raised will help to “fund vital local government services and implementing a significant reform to improve fairness within England’s property tax system”.

It added: “Council tax has remained untouched for decades and has not been readjusted as property values increase. That means that under this flawed system, a multimillion pound mansion could be paying less council tax than a small family home.

“Today the government is setting out the details for the new charge on owners of residential property in England worth £2 million and above to address this unfairness. The consultation also outlines how properties will be identified, valued and placed in a band for the surcharge.”

Dan Tomlinson, Exchequer Secretary to the Treasury, said: “A £10 million mansion in Mayfair should not be paying less council tax than an ordinary family home in Darlington or Blackpool. This change tackles historic unfairness, so that those with the most valuable properties pay their fair share, helping to rebalance the system and putting money back into communities up and down the country.”

Revaluations of properties worth more than £2 million will be carried out every five years, with the next revaluation being held in 2033, ensuring that the tax remains fair and up to date with house prices. The consultation also sets out proposals for taxpayers to review the valuation of their property.

The charge, which will affect less than 1% of properties, will come in from April 2028 and is expected to raise around £430 million per year to support funding for local government services.