Consultation launched on details for High Value Council Tax Surcharge

The government has opened a consultation on the High Value Council Tax Surcharge (HVCTS) expected to come into force in England from 1 April 2028.

HVCTS will apply to owners of residential properties in England worth £2 million or more and is payable in addition to the existing Council Tax. It is estimated that the charge will affect less than 1% of properties.

The consultation outlines the proposed details of how HVCTS will work in practice, showing how properties will be identified, valued and placed in a band for the surcharge.

How will properties be valued?

The Valuation Office will carry out a targeted valuation exercise to identify which properties will fall into the scope of HVCTS. Properties will be placed in one of four bands based on their value.

To determine the value of a property and its band for HVCTS purposes, the Valuation Office will look at the sales prices of similar properties as well as other attributes.

Revaluations will be carried out every five years, with the next valuation taking place in 2033.

Properties built after April 2028 will be valued either on completion or from the day the property is occupied. In most cases, where a property has been significantly improved or changed, it will be revalued when disposed of or when the next general revaluation takes place, whichever is sooner.

What type of properties will HVCTS apply to?

HVCTS will apply to dwellings, defined as a self-contained unit of residential property used as living accommodation.

It will include properties with a mixed-use where the residential element is distinct and self-contained will be included. Gardens, garages and private storage buildings that form part of the dwelling will be included.

Who will be liable for HVCTS?

The legal owner of the property, rather than the occupier, will be liable for the surcharge. Where a property is jointly owned, the owners will be jointly and severally liable.

The beneficial owner of a property could be different to the legal owner. For instance, trustees may legally own a property until a minor, the beneficial owner, comes of age. In such situations, it is the legal owner who will be liable for the surcharge.

The government has confirmed that trustees will be liable to pay the charge, even in bare trust arrangements.

The government is proposing to charge HVCTS to the leaseholder, rather than the freeholder, if the lease they hold is defined as a long lease. This means that the lease was initially granted for more than 21 years, or the law treats it as such. Where the lease is not a long lease the surcharge will be assessed on the freeholder.

Are there any exceptions?

For eligible individuals, a deferral scheme will be available allowing HVCTS payments to be delayed until the property is disposed of.

Proposals show that the deferral will be available to those with income and capital savings below thresholds used in the welfare system, and where the property is the main home of someone who is disabled or severely mentally impaired.

Some property types will also be exempted or receive a discount.

How will HVCTS be billed?

The first HVCTS bills will be sent out in March 2028, and local authorities will collect the payment in the same way as Council Tax. The default will be to make 12 monthly payments, but it will be possible to request 10 payments.

Will there be a premium charged to non-UK resident owners?

As part of the consultation, the government is also collecting information to explore whether to charge an additional HVCTS premium to non-UK resident owners of homes that are liable for the tax.

Is there a way to challenge or appeal HVCTS?

Owners who believe that their property band is incorrect or that their property is not within the scope of HVCTS will be able to challenge and appeal the Valuation Office’s decision.

The same is true if they receive a bill but do not believe they are the liable person or the bill has been calculated incorrectly.

If unhappy with the outcome of the challenge, it will be possible to appeal to the Valuation Tribunal for England.