Mansion tax is worst since the 1696 windows levy, say councils

By the Editorial Team · Wednesday, September 16, 2026

Four London borough councils have formally opposed the government's planned high value council tax surcharge, warning it will disproportionately impact wealthy homeowners and may lead to tax avoidance similar to the historic window tax. With the tax set to begin in April 2028 and expected to raise over £400 million annually, the dispute highlights ongoing concerns about fairness and economic effects in London's high-value property market.

Four London borough councils have urged the government to reconsider the introduction of the new mansion tax, warning it could have severe unintended consequences reminiscent of historical property levies. The charge, officially named the high value council tax surcharge, is set to take effect from April 2028 and will apply to homes valued over £2 million.

Under the scheme, properties valued between £2 million and £2.5 million will face an annual surcharge of £2,500, which rises incrementally to £7,500 for homes valued above £5 million. The Office for Budget Responsibility (OBR) projects that more than 165,000 properties nationwide will be subject to the tax, with the majority located in London.

Councils representing Wandsworth, Kensington and Chelsea, Westminster, and Richmond have jointly expressed strong opposition in a letter addressed to Chancellor John Healey. They argue that residents in their areas will bear a disproportionate share of the burden, estimated at approximately £270 million per year—more than half of the £400 million the OBR expects the tax to generate. According to data from the Institute for Fiscal Studies, 30 percent of homes in Kensington and Chelsea and nearly 24 percent in Westminster exceed the £2 million threshold, figures significantly higher than the national average of less than 1 percent.

Peter Graham, Wandsworth’s cabinet member for finance, criticised the tax as "the most badly designed tax on properties since the one on windows 330 years ago." He was referring to the window tax introduced in 1696 during the reign of William III, which levied homeowners based on the number of windows their properties contained. That tax is widely regarded as a failure because many property owners bricked up windows to avoid paying, resulting in darker, less healthy living spaces. The current councils warn that this new surcharge may prompt similar avoidance strategies, including attempts to undervalue homes artificially to reduce the tax bill.

John-Paul Marks, chief executive of HM Revenue & Customs, indicated last week that homeowners subject to the surcharge would be given a six-month window to appeal their property valuations.

The Treasury defended the policy, stating it aims to raise over £400 million annually to support public services and address what it describes as a “longstanding unfairness” in the council tax system. Currently, some lower-valued properties, such as band D homes in places like Darlington or Blackpool, pay more council tax than mansions worth millions in prime London locations such as Mayfair.

As the April 2028 implementation date approaches, debate continues over whether the surcharge will effectively generate revenue without causing significant distortions or hardships among homeowners in high-value property markets.

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.