Millions of households across England are set to receive a temporary financial reprieve, with council tax bills being reduced to zero for two months in 2026. The move comes as a precursor to a major overhaul of the property tax system planned by the government.
A Welcome Payment Holiday for Bill Payers
Under the new measure, council tax payers will be eligible for a two-month break from paying the charge in 2026. This effectively means that for those who pay their annual bill over ten monthly instalments, no payments will be required in February and March of that year.
It is important for residents to check their direct debit arrangements and their latest bill to confirm whether they currently pay over 10 or 12 months. The government already allows those who are struggling to spread their annual liability across 12 months instead of the standard ten, providing more manageable monthly outgoings.
For example, a household with an annual council tax bill of £1,200 paying over ten months would normally pay £120 per month. The 2026 break would see their total payments for the year drop to £1,000, with the February and March payments waived. It is worth noting that specific payment rules can vary slightly between different local authorities.
Major Reform: New Council Tax Bands and Surcharge from 2028
This temporary relief precedes a significant and permanent change to the council tax system. The Labour government has confirmed it will introduce four new council tax bands from April 2028, specifically targeting high-value properties.
A new High Value Council Tax Surcharge (HVCTS) will be applied to owners of residential properties in England valued at £2 million or more. This surcharge is separate from the existing council tax structure and will be calculated based on a property's estimated value in 2026, not its 1991-based band.
The Valuation Office Agency (VOA) will conduct a targeted valuation exercise to determine which properties fall into the new scheme. The surcharge will then be applied through four bands:
- Properties worth over £2 million: Surcharge starting at £2,500 per year.
- Properties worth over £5 million: Surcharge rising to £7,500 per year.
What This Means for Homeowners
The government and the VOA have stressed that the new high-value surcharge is a completely separate charge from standard council tax. Current council tax bands (A-H) will not be used to determine eligibility for the HVCTS and will remain unchanged. Equally, a future change to a property's standard council tax band will not affect its liability for the new surcharge.
This two-stage approach—a short-term payment break followed by a long-term restructuring aimed at higher-value properties—marks one of the most substantial shifts in domestic property taxation since council tax replaced the poll tax in 1993. Homeowners, particularly those in higher-value areas, are advised to stay informed as the 2026 valuation and 2028 implementation dates approach.
