Will Sussex Feel the Mansion Tax Disproportionately? And What Owners Should Do Now?
15th December 2025
Author EditorPosted on Categories Legal
Written by Juliet Godfrey, Partner at Mayo Wynne Baxter.
The Chancellor confirmed the anticipated ‘Mansion Tax’ in her budget of 26 November 2025. This levy (officially called the High-Value Council Tax Surcharge (HVCTS) will apply to properties worth more than £2 million and comes into effect from April 2028. The government maintains this will affect fewer than 1% of homes in England, but its impact will be far from evenly geographically distributed.
Under the new rules, owners of properties valued at £2 million or more (based on 2026 valuations carried out by the Valuation Office rather than based on the last purchase price) will have to pay an annual surcharge in addition to their existing Council Tax bill. The new tax will be structured in four bands:
• £2m – £2.5m: £2,500 per year
• £2.5m to £3.5m: £3,500 per year
• £3.5m to £5m: £5,000 per year
• £5m+: £7,500 per year
Charges will rise in line with CPI inflation each year from 2029-30 onwards, and thresholds will be reviewed every five years. The tax will be collected alongside Council Tax but directed to central government rather than Local Authorities. The HVCTS is estimated by government to raise around £430 million of revenue per year from 2028/29.
It has been reported that there are currently about 145,000 UK homes valued at more than £2 million but some estimate this number will rise to 190,000 by 2028. Further reports estimate that 62% of all £2 million plus properties are in London with a further 18% in the south-east primarily in the commuter belts of Surrey, Kent and Sussex.
Farmhouses and landed country estates, private waterfront houses and properties in close proximity to sites of historic interest may well fall into this category. However, in parts of East and West Sussex period homes (in places such as Chichester, Lewes, Brighton and Hove and Horsham) and coastal and village properties (in places such as West Wittering, Ditchling and Petworth) often sell for more than £2 million.
This regional concentration of higher value properties in London and the South East highlight a somewhat disproportionate burden on those areas including Sussex and raises the question as to whether the new wealth tax is ‘fair’. Whilst some may argue that the levy is relatively modest and goes some way to redressing the current inequalities of the Council Tax system and should be entirely affordable for those owning high value properties, there will be Sussex homeowners in this bracket who would not describe their family houses as ‘mansions’. Many have inherited their homes, or their properties may be subject to significant mortgage debt; many will be owned by retirees or long-term owners whose wages have not kept up with inflation in their affluent geographical area. There will be young parents who have stretched to move into a school catchment hotspot. For some the charge will increase financial strain in what is already an uncertain climate.
A consultation in 2026 will explore deferral options for homeowners who are ‘asset-rich but cash-poor’. The ability to delay paying the charge until a sale of the property will provide some comfort to those owners. The government will also consult on a full set of reliefs and exemptions alongside proposed rules for more complex ownership structures (such as companies and trusts).
More affluent owners of second homes already paying double Council Tax are also likely to feel particularly unfairly treated.
Perhaps the fairness’ of the Mansion Tax will depend on how it is implemented, how valuations are carried out and agreed and whether there are suitable deferment options, reliefs and exemptions, regional considerations and regular revaluations. Time will tell.
In the Conveyancing market, some buyers may now think twice about buying properties valued at just over £2 million and we will likely see a surfeit of properties being sold at just below the threshold in an attempt to crystallise the value for the next few years, but with the Valuation Office Agency carrying out their own targeted valuation exercise, success will not be assured. There may be a trend towards downsizing. Property prices on sale may for a while be deflated to account for the cost of the surcharge. In anticipation of the announcement there may have been a cooling of the top end market but it remains to be seen how the market reacts to the reality announced. There will not be immediate concern as the tax won’t take effect until 2028 but homeowners will have to factor this in to their decision making going forward.
In any event buyers and sellers of high value properties should consider five key points:
1. Check your 2026 valuation – Know if your property will exceed £2m and the likely annual surcharge.
2. Assess market impact – Consider how the tax might influence property values, liquidity, and relocation or downsizing decisions.
3. Review deferral and relief options – Track consultation outcomes for potential exemptions, especially if you’re asset-rich but cash-poor.
4. Plan for future revaluations – Anticipate the effects of five-yearly valuations if your property sits near a threshold.
5. Collect supporting evidence early – Compile sale comparables and surveys to strengthen your case in any valuation discussions.
In a shifting landscape, informed planning will be the best protection for Sussex homeowners.
Juliet Godfrey, Partner