Four London boroughs 'to pay 55% of mansion tax'

Four councils in London have complained to the government that plans for additional council tax on homes worth more than £2m will hit their residents hardest.

The leaders of Kensington and Chelsea, Richmond, Wandsworth and Westminster councils told Chancellor John Healey that 55% of the projected amount raised will be from their boroughs.

The high value council tax surcharge, dubbed the mansion tax, is an annual levy of between £2,500 and £7,500 scheduled to take effect in April 2028.

A Treasury spokesperson said it will address "a long-standing unfairness in our country" where a Band D home in some parts of England is liable for more council tax "than a £10m mansion in Mayfair".

Council tax uses eight valuation bands, based on property values in 1991.

HMRC will therefore have to conduct a "targeted valuation" to identify properties above £2m and classify them into bands.

An estimated 84,000 homes in Greater London are worth £2m but that figure has not been confirmed by government valuations.

The government proposes that properties it estimates to be worth £2m to £2.5m will pay an extra £2,500, with those worth £2.5m to £3.5m paying £3,500 more, £3.5m to £5m paying an extra £5,000 and those over £5m paying £7,500 extra per year.

Of the four councils who have complained to the chancellor, three are Conservative-controlled and Richmond is run by the Liberal Democrats.

Cllr Gareth Roberts, leader of Richmond Council, said the government "is seeing Richmond residents as cash cows that they can milk to fix funding gaps elsewhere in the country, irrespective of whether they can afford to pay this new tax".

Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council, said: "This is not a tax carefully targeted at the very wealthy.

"It lacks nuance and will hit pensioners, families and long-standing residents whose homes have risen in value while their incomes have not."

They also said it should not be called a "council tax surcharge", because none of the money raised would remain in the boroughs or support local services.

Cllr Paul Swaddle, leader of Westminster City Council, said high property values "do not always translate into high household incomes, and it risks creating unfair outcomes for residents whose property value does not reflect their ability to pay".

And Cllr Robert Morritt, leader of Wandsworth Council, said they "won't get to keep a single extra penny raised - this is an unfair attack on well-run councils like ours, with Wandsworth residents hammered to pay for those elsewhere".

The borough leaders said their residents would be paying £270m in "mansion tax".

A Treasury spokesperson said the tax is expected to raise about £430m per year across England.

They added: "Local authorities will be fully compensated for the additional costs of administering this new tax."

The government said the surcharge will be used to support funding for local government services, to be set out in the 2027 spending review, and there will be "appeals arrangements, reliefs and exemptions, and a support mechanism for those who may struggle to pay".

The Office for Budget Responsibility (OBR) said in November 2025 that it expected the council tax surcharge would begin to be reflected in the price of properties, with "price bunching to just below each band boundary".

This refers to the incentive to value a property just below the price at which it would become liable for the charge - something which "reduces the estimated yield by reducing the number of properties in scope of the measure".

The band at which properties will become liable for the charge will increase in line with inflation.

In its assessment, the OBR said the costings for the new surcharge had a "high" degree of uncertainty.

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