The latest Budget announcement introduces a new council tax surcharge on homes valued at £2 million or more from April 2028. It’s already been labelled a “mansion tax”, but the truth is that far more ordinary families will be caught by it than the name suggests — particularly in London and the South East where property prices have risen dramatically over recent years.
If you are thinking about separation or currently navigating a divorce, this change may have a real impact on your financial settlement, future housing and long-term planning.
Here’s how.
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Keeping the Family Home May Become Much More Expensive
From 2028, owners of £2m+ properties will face an additional £2,500–£7,500 a year in council tax. For many separating couples, that extra cost will make it far harder for one party — usually the financially weaker spouse — to afford to stay in the home after divorce.
This could:
- Push couples towards selling sooner than planned
- Reduce the value of keeping the property as part of a settlement
- Make the family home feel more like a future liability than a safety net
If your home sits close to the £2m threshold, this will become an important factor in negotiations.
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Property Revaluations Will Create New Uncertainty
For the first time since 1991, properties in Bands F, G and H will be revalued. This alone may push homes into higher categories — even properties currently sitting below the £2m mark today.
For divorcing couples, this matters because:
- You may need updated, professional valuations
- Settlement discussions may need to factor in future tax exposure
- There may be increased disagreement over the true value of the home
Property can already be the most contentious issue in divorce — and this change adds a fresh layer of complexity.
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Your Financial Settlement Could Shift
If one spouse keeps a qualifying property, the future surcharge reduces the property’s net value. That often means they may seek:
- A larger share of other assets
- A reduced lump sum
- A different structure to the settlement altogether
Courts may increasingly accept that a significant future tax burden should be reflected in how assets are divided today.
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Maintenance Arrangements Could Be Affected
Higher housing costs can shape both spousal and child maintenance discussions.
We may see:
- More variation applications (“my costs have risen — I cannot afford the current order”)
- Arguments around reasonable future living expenses
- A widening gap between what each parent can afford in different locations
If you rely on or pay maintenance, this change may ultimately influence your monthly budget.
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Housing Plans for the Children May Get More Difficult
In London and the South East, even modest family homes can exceed £2m. When a couple separates, this surcharge may make it harder for both parents to secure affordable homes in the same area.
This could affect:
- School catchments
- Shared care arrangements
- Relocation discussions
- The children’s long-term stability
Expect to see more disputes where housing affordability becomes central to child arrangements.
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Timing Will Suddenly Matter in Your Divorce
Because the surcharge begins in April 2028, couples may find themselves debating:
- Whether to sell before the surcharge kicks in
- Whether to transfer the home sooner rather than later
- Whether to wait until after the revaluation for clarity
This introduces new tactical considerations into an already emotional process.
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High-Net-Worth Couples Should Review Pre- and Post-Nups
If you have a prenuptial or postnuptial agreement — or are considering one — this new surcharge may need to be incorporated.
That includes:
- Allocating responsibility for the future tax
- Planning for how the property is treated on separation
- Clarifying who retains what if the home becomes significantly more expensive to maintain
Clarity now can prevent costly disputes later.
What This Means If You’re Thinking About Separating
This isn’t merely a technical tax change.
It shifts:
- How couples negotiate
- What counts as a “fair” settlement
- Whether you can afford to keep the home
- Your future housing options
- The long-term financial picture for you and your children
If your property is in London or the South East — or anywhere near the £2m threshold — this announcement could directly influence your divorce strategy.
Need Advice? We’re Here to Help
Whether you are worried about keeping the home, understanding your financial options, or protecting your children’s stability, early legal advice can make all the difference.
If you’d like to understand how this change could affect your separation or financial settlement, get in touch. We can guide you through your options and help you plan with confidence.