Lowering the mansion tax threshold will hit the North hard

By the Editorial Team · Wednesday, July 22, 2026

The UK government is considering lowering the mansion tax threshold from £2 million to £1.5 million, which would extend the levy to approximately 137,000 additional homeowners across the Midlands and North of England. This change could significantly boost Treasury revenues but also raise affordability concerns, especially for middle-income homeowners in London and other regions where property values have increased.

The UK government is reportedly considering lowering the threshold for the recently introduced “mansion tax,” a high-value council tax surcharge, from properties valued at £2 million to those worth £1.5 million. This proposal aims to increase revenue for the Treasury but would extend the tax’s reach well beyond London and the South East, affecting a larger number of homeowners in the Midlands and the North of England.

The current surcharge, introduced by Sir Keir Starmer’s administration at the latest Budget, requires owners of homes valued above £2 million to pay an additional £2,500 annually. Higher-value properties face steeper charges, with homes over £5 million subject to £7,500 per year. The tax was expected to generate approximately £400 million annually for the government.

If the threshold were reduced to £1.5 million, an estimated 137,000 additional households would become liable for the charge, potentially increasing revenues by a further £343 million, assuming the lowest surcharge level applies. Property experts warn that such a move would disproportionately affect homeowners outside the capital.

David Fell, a representative from property firm Hamptons, noted that lowering the threshold would more than double the number of households affected nationwide, a 102 percent increase. He highlighted that the Midlands and North of England would see even sharper rises, with increases between 150 and 180 percent. For example, in the North West, liable households would increase from 3,249 to 7,639, while in the West Midlands the figure would rise from 1,812 to 5,040.

Fell also emphasized that in London, the change could extend the tax to more modest family homes, including three- and four-bedroom terrace houses, especially those that have appreciated significantly in value over the years.

Michael Dent, founder of the Property Tax Lab, agreed that London and the South East would continue to bear the brunt of the tax. He pointed out that in affluent areas such as Kensington and Chelsea, 35 percent of households would be subject to the surcharge with a £1.5 million threshold, and 25 percent in Westminster. Dent noted that in boroughs like Wandsworth and Hackney, the price range between £1.5 million and £2 million often corresponds to three-bedroom Victorian terraces, far from traditional mansions.

The prospect of the tax impacting a broader range of properties has raised concerns among older homeowners on fixed incomes, some of whom fear they may be compelled to sell their homes due to the additional costs.

Hamptons also revealed a decline in the number of homes valued at or above £2 million since last year’s Budget, with 9,587 fewer qualifying properties. This decline is attributed to buyers submitting offers strategically to keep home values just below the £2 million threshold to avoid the surcharge. The government is reportedly weighing the threshold reduction as one option to bolster public finances amid ongoing fiscal challenges.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.