Four London councils have written to the Chancellor warning that the Government’s planned “mansion tax” will cost residents in their boroughs around £275 million a year — more than half of the revenue the levy is expected to raise nationwide.
The mansion tax letter, signed by the leaders of Wandsworth, Richmond, Westminster, and Kensington and Chelsea councils, urges the Government to reconsider the High Value Council Tax Surcharge before it takes effect in April 2028.
The councils argue that the new levy is “badly thought-out”, carries high implementation costs, and will land with “hugely disproportionate impact” on their residents.
What the mansion tax letter says
In their letter to Chancellor John Healey, the four borough leaders claim that households within their boundaries will have to find some £275 million a year between them — over half of the revenue the Government expects the tax to generate across the whole of the UK.
Wandsworth Council said the tax would target residents who already contribute heavily to the public finances, and warned of two knock-on effects: landlords hit by the surcharge may pass the cost on to tenants, pushing up rents, and long-standing residents whose homes have risen in value over decades but who live on modest incomes could be disproportionately affected.
Cllr Robert Morritt, leader of Wandsworth Council, said: “We won’t get to keep a single extra penny raised, with Wandsworth residents hammered to pay for those elsewhere. Why should an additional tax on our residents’ houses be spent so far from their homes?”
Cllr Gareth Roberts, leader of Richmond Council, said the Government was treating Richmond residents “as cash cows that they can milk to fix funding gaps elsewhere in the country, irrespective of whether they can afford to pay this new tax”.
Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council, said: “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 Paul Swaddle, leader of Westminster City Council, added that high property values “do not always translate into high household incomes, and it risks creating unfair outcomes for residents whose property value does not reflect their ability to pay”.
One Wandsworth cabinet member, Peter Graham, compared the levy to the notorious window tax of 1696, calling it “the most badly designed tax on properties since the one on windows, 330 years ago”.
How the High Value Council Tax Surcharge would work
The tax, officially called the High Value Council Tax Surcharge, was announced by former chancellor Rachel Reeves in the 2025 budget. From April 2028, homes in England valued at £2 million or more will pay an annual surcharge on top of their council tax bill, set in four bands: £2,500 a year for homes worth between £2 million and £2.5 million; £3,500 for homes between £2.5 million and £3.5 million; £5,000 for homes between £3.5 million and £5 million; and £7,500 for homes worth more than £5 million.
The Office for Budget Responsibility, the fiscal watchdog, has estimated that more than 165,000 homes will be affected in the first year, with the vast majority in London and the South East. The surcharge will involve a revaluation of high-value homes — the biggest such exercise in more than 30 years — and HM Revenue & Customs is bringing around 300 extra staff into its valuation department to carry it out, including handling appeals.
Homeowners will be told next autumn whether their property is liable and will then have about six months to challenge the decision before the tax is introduced.
According to analysis by the Institute for Fiscal Studies, nearly 24 per cent of homes in Westminster and 30 per cent in Kensington and Chelsea are worth more than £2 million, compared with 4.4 per cent in Wandsworth and 6.1 per cent in Richmond — all well above the national average of less than 1 per cent.
Government: “addressing a longstanding unfairness”
The Government is standing by the policy. A Government spokesperson said: “This tax is expected to raise around £430m per year to help fund public services and is addressing a longstanding unfairness in our country, where a Band D home in Darlington or Blackpool pays more in council tax than a £10m mansion in Mayfair.”
The four councils say they want the Government to devise a fairer approach together with local government rather than imposing what they call a “disproportionate burden” on London residents. Whether the letter changes the timetable — with valuations due to begin next year — remains to be seen.
