Property prices are so high in London that even one-bedroom flats are to be caught by the “mansion tax” while some castles outside the capital will escape being hit by it.
Castles which will almost certainly not be impacted by the new levy on homes worth over £2 million, announced by Rachel Reeves in her Budget, include 18th-Century Tawstock Castle in North Devon, which has its own helipad.
Tawstock Castle sits “majestically” on a North Devon hilltop in 8.41 acres of private, fenced grounds, approached via a long private gated driveway, according to Knight Frank which is marketing the property.
The Grade II listed castle also includes castellated battlements, a lookout tower, ornately corniced ceilings, a “stunning” castellated roof terrace and a King Arthur round table.
It is in Council Tax band H but as it is for sale with a guide price of £1,350,000 it is unlikely to be impacted by the “mansion tax” which will have annual charges from 2028 for property owners of between £2,500 and £7,500.
Augill Castle in Cumbria, which was on the market earlier this year for £1.75 million, is also unlikely to be caught by the new levy, if it is turned into a residential home.
The 19th-Century castle is located in a “delightful setting” and surrounded by open countryside, with land extending to about 10 acres, according to castles for sale website Castleist.
It adds: “There are ample lawned gardens with established flower beds and borders, mature trees and fenced paddocks.
“A large gravelled parking area provides parking for up to 30 vehicles. The tennis court was recently refurbished (2021), and there is a children’s playground.”
Augill Castle is currently a boutique hotel and was being marketed as also being “ideally suited as a residential country house”.
The Institute for Fiscal Studies highlighted how nearly one in four of the properties to which the “mansion tax” will apply are in just three London boroughs, Kensington and Chelsea, Westminster and Camden.
It added that 69% of affected homes are in London and the wider South East.
In the capital, even some one-bedroom flats will be impacted in sought after streets such as Wetherby Gardens in South Kensington.
In London, there were 6,574 properties sold for over £2 million in the last two years, according to the IFS.
This total included 2,177 sold for between £2 million and £2.5 million, 1,784 between £2.5 million and £3.5 million, 1,044 between £3.5 million and £5 million, and 1,569 for over £5 million.
There will be four “mansion tax” price bands with the surcharge starting at £2,500 a year for properties worth over £2 million to £2.5 million, £3,500 for those valued at £2.5 million to £3.5 million, £5,000 for homes worth £3.5 million to £5 million, and £7,500 for properties worth more than £5 million.
The Valuation Office is to conduct a “targeted valuation exercise” to identify properties above £2 million and therefore in scope of the “mansion tax”.
It is expected to look at homes in the higher Council Tax bands F, G, and H.
In her Budget speech, the Chancellor said the “mansion tax” aimed to address a “longstanding source of wealth inequality in our country”.
She added: “A Band D home in Darlington or Blackpool pays just under £2,400 in Council Tax, nearly £300 more than a £10m mansion in Mayfair.
“So from 2028, I am introducing the High Value Council Tax Surcharge in England.”
But Jo Eccles, founder and Managing Director of prime central London buying agency, Eccord, stressed: “The continued pursuit of those with wealth is deeply damaging and counterproductive.
“It doesn’t just impact the ultra-wealthy who are highly mobile and now have another reason to move elsewhere, at a significant loss to the UK economy.
“With the threshold set at £2 million, this measure directly impacts London’s upper-middle classes – who are typically households with mortgages and finite resources.”
Jason Tebb, President of OnTheMarket, criticised the new tax, saying: “This will hit London and the South East hardest..
“The market is now being faced with distorted buyer behaviour, price stagnation at the top end, and a ripple effect across the wider market.”
