Rachel Reeves is said to be considering the implementation of a new levy on properties valued above £2 million as part of her upcoming budget. Dubbed a “mansion tax,” this measure is expected to impact over 100,000 of the most expensive homes. Initially proposed at a £1.5 million threshold, it has been raised to £2 million to avoid putting financial strain on families with valuable assets but limited liquidity.

The proposed tax would target homes in the highest bands F, G, and H, with approximately 2.4 million properties set to undergo revaluation. Individuals affected by the tax may have the option to defer payment until they sell their property or pass away, as per reports from The Times. The Treasury has refrained from commenting on any specifics related to the budget.

Council tax in England is categorized into bands determined by property values in April 1991, with the average Band D council tax for the 2025-2026 fiscal year in England set at £2,280. Scotland and Wales have their own unique council tax banding systems.

The government is currently seeking feedback on proposals to extend council tax payment periods from ten to twelve months. While households can request the extended payment schedule for smaller monthly payments, this change is expected to become the default option. According to data from the Ministry of Housing, Communities, and Local Government, households in the average Band D category could save around £38 monthly under the new payment structure.

Despite the new payment plan, households will still have the choice to pay their council tax over ten months. Additionally, the consultation includes suggestions to improve the debt collection process for individuals missing council tax payments.

Residents are encouraged to inquire with their local council about potential council tax discounts, such as a 25% reduction for single occupants or a 50% discount for households where all members are exempt from paying. Those receiving benefits or with low incomes should explore Council Tax Support or Reduction schemes offered by their local authorities, which could lead to complete exemption from council tax in certain cases.

Lastly, homeowners are advised to investigate the possibility of challenging their council tax band. Correcting an overestimated band could result in significant refunds and lower future bills, although caution is advised as contesting a band that is too low may lead to higher tax assessments in the future.