Non-Resident Mansion Tax Premium Proposed for Overseas Property Owners

A non-resident mansion tax premium on top of the forthcoming High Value Council Tax Surcharge (HVCTS) is under active consideration by HM Treasury, according to a consultation that closes on 14 July. The proposal would apply an additional levy specifically to non-UK resident owners of high-value English properties, on top of a surcharge already set to take effect in April 2028.

The HVCTS consultation states that ‘in high-pressure housing markets, particularly in areas such as London, there is interest in understanding whether demand from non-UK resident owners may be contributing to pressures on housing availability and prices.’ No detail on how the premium would be calculated has been published; it remains a question posed to respondents, not a settled policy.

How the HVCTS Works Before Any Non-Resident Premium

Announced in the 2025 Budget, the HVCTS is designed to address what the government describes as the largest inequalities in the council tax system, targeting the 1% most valuable properties in England. Eligibility will be determined by a dedicated valuation exercise carried out by the Valuation Office (VO), using property values as assessed in 2026. That valuation is entirely separate from existing council tax bands: a property’s council tax band will have no bearing on whether it falls within scope, and a change in council tax band will not affect eligibility.

Liability falls on homeowners rather than occupiers, and the surcharge sits alongside, not instead of, existing council tax. Local authorities will collect the revenue on behalf of central government. The charge bands are straightforward: properties valued at £2 million or more but below £2.5 million face a £2,500 annual charge; those between £2.5 million and £3.5 million pay £3,500; between £3.5 million and £5 million the charge is £5,000; and properties at £5 million or above face £7,500. All bands will rise in line with the Consumer Price Index each year, with full revaluations every five years.

What Would the Non-Resident Mansion Tax Premium Look Like?

The consultation gives no figure for the potential non-resident premium, leaving its scale entirely open. An HM Treasury spokesperson said: ‘The government is inviting views on whether there could be a case for a non-resident premium, as part of a wider consultation which seeks to address a longstanding council tax unfairness in this country. We welcome views from all interested parties, including on whether demand from non-resident owners may be contributing to housing pressures.’

For those trying to gauge who falls in scope, the statutory residence test (SRT) broadly defines a non-UK resident as someone who spends fewer than 16 days in the UK each tax year, or works abroad full-time and spends fewer than 91 days in the UK each tax year with no more than 30 of those days spent working in the UK.

The Wealth-Flight Risk

Several advisers are sceptical the premium will raise the revenue intended. Marc Acheson, global wealth specialist at Utmost, said: ‘This latest proposal is likely to raise far less revenue than envisaged as more people will consider selling London properties, putting further downward pressure on valuations at the top end of the housing market. More broadly, it risks further damaging the UK’s reputation as a destination for wealth and accelerating the ongoing exodus of wealthy international individuals that began in earnest following the abolition of the non-dom regime at the Autumn 2024 Budget.’

The replacement non-dom framework offers new arrivals 100% relief on Foreign Income and Gains (FIG) for their first four years of UK tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to arrival. The previous government’s proposed 50% transitional relief on foreign income for those losing access to the remittance basis in the first year of the new regime was dropped.

Sian Armitage, tax director at Mark Davies and Associates, suggested the premium could tip undecided non-resident owners towards selling. ‘For those that are undecided, they may treat this as yet another reason to sell, or consider this as an indication of things to come,’ Armitage said. She added, however, that ‘it does imply that those individuals are not spending significant time in the UK in any case, so I don’t envisage this policy alone as having a negative impact.’

Peter Ferrigno, director of tax services at Henley and Partners, agreed the premium in isolation would be an ‘inconvenience’ rather than a trigger for mass selling, but framed the cumulative picture differently: the risk is that wealthy international individuals weigh the non-resident mansion tax premium alongside ‘many other changes, and an indication that there will still be more demands for a bit here, a bit there, a bit more after that, and then…who knows what’s next.’

The consultation closes 14 July. The government’s response, and whether a rate for the premium is proposed at all, will be the first test of how far Treasury is willing to push on internationally mobile capital.