Care homes will receive a full exemption from the new High Value Council Tax Surcharge, the government has confirmed, ending months of lobbying by the care sector over the planned levy on high-value properties.

Care England, which represents care providers, said the confirmation delivers the outcome it had pressed ministers to adopt. The organisation first raised concerns in February 2026, warning the Housing Secretary that applying the surcharge to care homes would place unnecessary financial pressure on essential services.

What the surcharge will cover

The High Value Council Tax Surcharge is a new charge on owners of residential property in England worth £2 million or more, taking effect in April 2028. Homeowners, rather than occupiers, will be liable, and they will continue to pay their existing council tax alongside the surcharge. Local authorities will issue the first bills in March 2028.

Care England had estimated that including care homes could have imposed £25 million to £33 million in additional annual costs across the sector, with qualifying properties facing annual charges of between £2,500 and £7,500. The organisation argued the cost would ultimately have fallen on local authorities and the NHS through higher fees, or on investment in services.

Who else is exempt

The government's published guidance confirms that exemptions and discounts will apply to certain property types depending on their characteristics and use, including care homes, registered social housing and working farmhouses. A full list is set out in the government's response to its consultation on the surcharge.

Other exemptions confirmed in Budget 2026 reporting include purpose-built student halls, long-stay hospital accommodation, hospices and most Ministry of Defence barracks.