The government is considering plans to hit non-UK resident property owners with an additional levy on top of the so-called “mansion tax”, as part of a consultation launched by HM Treasury. The proposed “non-resident premium” would apply to homes in England valued at £2 million or more, but the details of how it would work have yet to be defined.
The consultation, which closes on 14 July 2026, aims to gather views on whether demand from overseas owners is exacerbating housing pressures in high-value markets such as London. “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,” the consultation says.
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.”
Existing mansion tax rates
The High Value Council Tax Surcharge (HVCTS) – already dubbed the “mansion tax” – will take effect from April 2028 and apply to homes in England valued at £2 million or more. The charge will be owed once per tax year. The chancellor has claimed the surcharge will make the council tax system fairer.
The Valuation Office (VO), which is part of HMRC, will carry out a valuing exercise to assess which homes qualify. Properties valued between £2 million and £2.5 million will be charged £2,500; those between £2.5 million and £3.5 million will pay £3,500; homes between £3.5 million and £5 million will be charged £5,000; and properties worth £5 million or more face a £7,500 surcharge. These charges are set to increase each year in line with the Consumer Price Index (CPI) measure of inflation, with revaluations conducted by the VO every five years.
The concept of a mansion tax has been debated in the UK for years, with early proposals dating back to Vince Cable in 2009. It has been associated with attempts to make the property tax system fairer and to tax wealth more progressively.
Potential impact on the housing market
The government’s consultation offers no further detail on how a non-resident premium would be applied if it came into force, though some reports have referred to it as an “oligarch premium”. The proposal is being considered alongside the abolition of the non-domiciled tax regime, which took effect from April 2025, a change that has already been cited as a factor in an exodus of wealthy international individuals.
Non-UK residents already face additional charges when buying property in the UK, including a 1% Stamp Duty Land Tax surcharge, and are subject to UK income tax on rental profits and capital gains tax on disposals of UK property. The proposed premium would be an extra layer on top of the HVCTS.
Marc Acheson, global wealth specialist at pensions and life insurance firm 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 economy cannot afford to lose these individuals, who are the largest contributors to the tax base, and once this cohort leaves it is very hard to replace them.”
Sian Armitage, tax director at tax adviser Mark Davies and Associates, said the premium could push non-resident property owners who are weighing up a sale into putting their property on the market. “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,” she said. However, Armitage added that because the levy would apply to non-residents, “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 consultancy Henley and Partners, described making the HVCTS slightly higher for non-UK residents as an “inconvenience”, and said it was unlikely the introduction of such a premium on its own would be enough to make wealthy individuals sell up. But, he said, the bigger issue is that they could leave when also considering “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”.
Market data underlines the scale of foreign ownership. Between 25% and 35% of UK homes valued at over £2 million are foreign-owned. In London, international buyers accounted for 45% of purchases in prime central London in 2023, returning to pre-Covid levels, while across Greater London they purchased 24% of homes in 2023. The largest numbers of foreign UK homeowners come from Hong Kong, Singapore, the USA, the UAE, and China.
Who qualifies as a non-UK resident?
Non-UK residents pay tax on their UK income but not on their foreign income, whereas a UK resident typically pays UK tax on income from both sources. Under the statutory residence test (SRT), which applies from the 2013/14 tax year onwards, you are generally classed as a non-UK resident if you spend fewer than 16 days in the UK each tax year, or if you work abroad full-time and spend fewer than 91 days in the UK each tax year, with no more than 30 of those days spent working.
Foreign-owned homes across England are valued at a combined £84.2 billion, with London holding the largest share at £43.9 billion.
