Autumn Budget 2025: Property

The Government today announced the introduction of a High Value Council Tax Surcharge (the "HVCTS") (or what some have been calling the "Mansion Tax"), which will apply to homeowners of residential property in England with a value of more than £2m (as assessed following a new valuation exercise to be carried out by the Valuation Office). The HVCTS will be an additional charge on top of existing Council Tax (and any second homes premium Council Tax), and it is proposed that it will take effect in April 2028. The Government has said that it will consult on reliefs and exemptions that would apply this new tax, but no detail has been announced.

The current Council Tax system is widely seen as, at best, outdated and, at worst, a propagator of inequality, primarily because bands are based on property values from 1991. Even back then, as the IFS has reported, the tax's structure was regressive: the highest band paid only three times as much as the lowest band even though those properties could be worth eight times more. The HVCTS aims to tackle that inequality by taking an approach of effectively creating additional higher rate bands which are overlayed on the current system-perhaps a timid step compared to what could have been a more complete overhaul of property taxes.

The HVCTS will be applied using four progressive bands, as set out in the table below. At most, this would amount to 0.15% of a property's value annually, with the maximum charge of £7,500 applying to homes valued at £5m or above. The Government has also said that in-scope properties will be revalued every five years to ensure rates remain up to date.

The introduction of the HVCTS is, according to the OBR's forecasts, set to raise £0.4bn in 2029-2030. Included in the modelling of these forecasts are anticipated behaviour changes that will arise as a result of the new tax, primarily the bunching of property prices below the £2m threshold, the impact on prices of in-scope properties and the knock-on reduction in tax receipts, predicted to amount to £200m, which would have been collected through stamp duty land tax ("SDLT") and capital gains tax ("CGT") on otherwise higher value transactions of such properties.

The HVCTS is set to be collected by local authorities, on behalf of central Government. Since the collection of council tax is separate from the application of Government funding to local authorities, the HVCTS should not disproportionately increase tax receipts for the wealthiest local authorities (arguably the least in need of such resources) but instead provide funds to be reallocated to areas which need funding the most. 

Whilst the HVCTS is set to be introduced in 2028, as noted above, the Government has promised to launch a public consultation in early 2026 which is also set to consult on a full raft of reliefs and exemptions, as well as specific rules for other structures including companies, funds, trusts and partnerships. No further information has been provided which would illuminate how such proposed rules would work and how they would impact corporates or other entities which hold in-scope residential property, but it is reassuring that the Government will consult on these rules before they are implemented.

The Government has also said that finance cost relief will be provided at the basic property rate of 22%. However, it is expected that the current reliefs and exemptions will remain unaffected.

These changes will apply in England, Wales and Northern Ireland; the Government is set to provide the devolved Governments with the ability to set property income rates in line with their current income tax powers.

For more, read our analysis of the Personal tax announcements in Autumn Budget 2025. 

Before today, only two multipliers applied:

• the standard multiplier, and
  
  
• the (lower) small business multiplier. 

However, as a result of the announcement in Budget 2025, the Chancellor has added

• two different, lower, RHL multipliers, and
  
  
• a high-value multiplier, which will apply from April 2026 onwards. 

These new multipliers replace the temporary RHL business rates relief (set at 40%) which applies in the current tax year.

The multipliers will be as follows:

Revaluation

Not only are new multipliers being added in 2026, but the rateable value is also changing. Business rates for this tax year have been calculated in accordance with rateable values that were last adjusted on 1 April 2023, based on the cost to rent the property for a year as at 1 April 2021. From April 2026, rateable values will be adjusted in line with the cost to rent the property for a year on 1 April 2024.

Given that multipliers have been revalued down for the 2026-27 tax year, a scenario might arise where a business' increased rateable value is cancelled out by a reduction in their applicable multiplier. The Government believe that over half of business ratepayers will see no bill increases and that around 23% should see their bills go down, which leaves around a quarter of business ratepayers with an increase. They have announced a raft of support packages for some of these businesses, including targeted support to airports and hospitality businesses levied under the high-value multiplier.

Other Business Rates Reforms

The Chancellor has also announced the following:

• Expanding the business rate retention zone pilot (which included Cornwall, the West of England and Liverpool) to now also include Leeds City Centre - under this scheme, prescribed zones will be able to retain business rates above a certain baseline to try and fund growth within the area; and
  
  
• 100% relief for eligible electric vehicle charging points and electric vehicle only forecourts. 

In addition to these reforms, the Government has published a Call for Evidence on the role that business rates play in investment, building on an interim report published in September 2025. Further changes to the regime therefore seem likely.

Non-UK residents are currently subject to UK CGT on disposals of UK land and UK property rich entities, subject to the application of the relevant double tax treaty. Two minor changes have been made to these rules, with effect from 26 November 2025.

The first is in relation to the definition of "UK property rich entities". This change means that for protected cell companies (broadly, companies where the assets and liabilities have been separated into segregated compartments), you must test whether that entity is UK property rich by reference to the relevant cell or compartment, and not by reference to the company as a whole.

The Government has stated that the intention behind this change is to tackle avoidance schemes which use protected cell companies to get out of paying UK non-resident capital gains tax. The measure is not expected to have any impact on the Exchequer.

The second change is to codify the concessionary treatment already in place which states that where a non-UK resident individual:

• has invested in a collective investment vehicle (e.g. a fund), and
  
  
• would be exempt from a charge to UK non-resident CGT under a double tax treaty

then they are not required to file a UK tax return in order to claim the treaty relief. This will be a small, but welcome, change.

In the 2024 Autumn Budget, the Chancellor announced a change to Agricultural Property Relief and Business Property Relief. It was announced that, from April 2026, broadly, the existing 100% rate of relief for qualifying business and agricultural assets would apply for the first £1m of combined agricultural and business property and amounts above that £1m would be subject to a rate of 50%.

In addition to confirming that the Government will seek to implement these measures (despite the brigade of tractors making its way through London on the morning of the Budget), the Chancellor has announced that any unused £1m allowance on the death of a spouse or civil partner will now be can now be transferable to a surviving spouse or civil partner.

Measures are to be introduced to target entities which operate under the CIS and who knowingly engage with fraudulent businesses. 

Under the CIS, unless a sub-contractor carrying out construction work is registered for gross payment, payments made to it must be subject to withholding tax. The Government seek to introduce new 'punishments' with effect from April 2026 for business who knew or should have known that they entered into a transaction connected with fraudulent evasion of tax, which include the contractor being stripped of its gross payment status (GPS) and becoming liable for penalties of 30% of lost tax to be charged to the engaging business and to its directors or other persons connected to the business.