Mansion tax to cost four London boroughs £270m from April 2028

Residents in four London boroughs will pay £270m a year under the government’s new mansion tax, set to begin in April 2028. The levy will add between £2,500 and £7,500 to annual council tax bills for homes valued at over £2m.

Kensington and Chelsea, Richmond, Wandsworth and Westminster councils told Chancellor John Healey that their areas will contribute 55% of the £430m the Treasury expects to raise across England. The councils said the money will not fund local services.

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Who pays and how much

The tax will apply in bands. Homes worth £2m to £2.5m will face an extra £2,500 a year. Those valued at £2.5m to £3.5m will pay £3,500, £3.5m to £5m will pay £5,000, and properties over £5m will pay £7,500. The thresholds will rise with inflation.

HMRC will conduct targeted valuations to identify eligible properties. About 84,000 homes in Greater London are estimated to be worth over £2m, but the government has not confirmed this figure.

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Councils say tax is unfair

Council leaders said the tax will hit residents whose incomes have not kept pace with rising property values. Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council, said it will affect pensioners and long-standing residents, not just the wealthy.

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.

Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council

Cllr Gareth Roberts, leader of Richmond Council, said the government is treating residents as a source of revenue to fix funding gaps elsewhere. Cllr Paul Swaddle, leader of Westminster City Council, said high property values do not always mean high household incomes.

Cllr Robert Morritt, leader of Wandsworth Council, said the councils will not keep any of the money raised. He called it an unfair attack on well-run boroughs, with residents paying for services elsewhere.

What happens next

The Treasury said local authorities will be fully compensated for administration costs. The revenue will support local government services, with details to be set out in the 2027 spending review.

Residents will be able to appeal valuations. The government will also introduce reliefs and exemptions, including support for those who struggle to pay. The Office for Budget Responsibility said the tax’s yield is uncertain due to potential price adjustments below band thresholds.