Who qualifies
The government's consultation response confirms that a household qualifies if it meets any one of these tests:
- annual household income of £35,000 or less
- capital savings of £16,000 or less, the same limit used for pension-age council tax support
- someone in the household meets disability criteria aligned with the council tax rules
Meeting one test is enough. The consultation had asked whether owners should have to meet both the income and the savings tests, and the government decided they should not. Councils will check eligibility against national criteria, and the exact definitions, including the disability test, will be in regulations. The scheme becomes law only when the Finance Bill 2026-27 is passed.
How it works
- What is deferred
- The yearly surcharge, not council tax.
- Security
- The consultation proposed a charge registered on the property. The detail is for regulations.
- Interest
- Added to the deferred amount at a fair rate, to be set in regulations.
- Repayment
- When ownership changes, or earlier if you choose. Estates and probate are left to regulations.
The design follows the deferred payment agreements already used for adult social care, where councils lend against a home and are repaid from it later.
The interest question
The government has said the rate will be fair but has left the figure to regulations. The consultation set out several options without choosing one: the HMRC official rate, Bank of England base rate, the rate used for social care deferred payment agreements, or something else. When it was published those ranged from 3.75% to 4.75%.
Interest compounds on a charge that is itself rising with inflation. Over a long deferral the amount owed against the home can become substantial. If inflation averaged 5% a year, 20 years of the lowest band would add up to about £82,700 before any interest at all. That is an illustration, not a forecast.
Who is unlikely to qualify
- Companies. The tests are applied to a household.
- Owners who do not live in the home, such as landlords and second home owners. The scheme is built around the household living there, and the detail will be confirmed in regulations.
- Households that meet none of the income, savings or disability tests.
Before you defer
Deferral reduces what passes on to your family and adds a charge to the title. It is worth checking first that the home is in the right band at all. Taking a home below £2m removes the surcharge altogether, which is always better than deferring it.
Deferral questions
Can I defer the mansion tax?
Yes, if your household meets any one of three tests confirmed at the Budget on 28 October 2026: household income of £35,000 or less, savings of £16,000 or less, or someone in the household meeting disability criteria. You can then put off paying until the home changes hands. The tests are applied to a household, so a company is unlikely to qualify.
Is deferred mansion tax written off?
No. It builds up with interest and is repaid when ownership changes, for example on a sale, or earlier if you choose to settle. How it works when an owner dies is being left to regulations.
What interest would be charged on deferred mansion tax?
The government has said it will be a fair rate, but the rate itself will be set in regulations after the Finance Bill. The consultation put forward options including the HMRC official rate, Bank of England base rate and the rate used for social care deferred payment agreements, which ranged from 3.75% to 4.75% when it was published.
Last checked against the government's Budget documents and consultation response on 30 October 2026. The surcharge is being legislated in the Finance Bill 2026-27 and is not yet law. Some detail is still to come in regulations.