Owners of expensive homes face annual “mansion tax” bills of up to £15,000 if their properties remain empty for at least 12 months, under plans set out by the Treasury.

The 100% premium on the high-value council tax surcharge will apply to long-term empty properties above the £2 million value threshold from April 2028.

The charge, first announced by former chancellor Rachel Reeves, will be levied annually on top of council tax, with rates rising in line with inflation.

The mansion tax will start at £2,500 a year for properties valued at £2 million or more, rising to £7,500 for homes in the highest band, worth £5 million and above.

But properties that are “substantially unfurnished and unoccupied for a period of 12 months or more” will face double charges, in line with existing council tax premiums for long-term empty homes.

Owners of properties worth at least £5 million could pay up to £15,000 a year in mansion tax, in addition to double council tax bills, once the policy comes into force in April 2028.

The plans follow a government consultation on the “high-value council tax surcharge”, more commonly known as the mansion tax.

The premium will apply to all “underused” homes above the threshold.

The Government had initially considered proposals for a double tax on non-resident owners.

But exemptions, discounts and deferral schemes are expected to reduce the revenue raised by the policy.

Commenting on the announcement in the Budget, Helen Hutchison, residential property partner at Irwin Mitchel, said: “London homeowners are likely to feel the impact of this more than most, given the number of properties in the capital that will exceed the £2 million threshold.

“Owners will have to pay the surcharge on top of their existing council tax bill, but the real sting could be for high-value homes that remain substantially unfurnished and unoccupied for 12 months or more. A £5 million-plus property could face a surcharge of £15,000 a year.

“That could be particularly significant in London’s prime property market, including for overseas owners who may spend long periods away from their UK homes. It is another sizeable annual cost that buyers will now need to factor into the economics of owning a high-value London property.”

The Office for Budget Responsibility estimates that receipts will be around £45 million to £50 million a year lower by 2030 to 2031 than its initial projections.

Victoria Mellon, head of conveyancing at solicitors Setfords, said the mansion tax could “trigger a wave of disputes over property valuations”.

“For homeowners sitting just above one of the tax thresholds, even a relatively small difference could leave them paying thousands of pounds more every year,” she said.

“With so much money at stake, we can expect some owners to challenge how their properties have been valued, particularly when some of their neighbours have been assessed differently.”

The legislation also confirmed deferred tax payments could be made amid concerns about the impact on “asset-rich, cash-poor” households.

Households earning less than £35,000 or with savings of £16,000 or less can defer the charge and accrued interest until the property is sold.

This would apply to properties serving as the main home for disabled or severely mentally impaired residents for example.

Exemptions will also apply to purpose-built student halls of residence, care homes, long-stay hospital accommodation, hospices, and Ministry of Defence barracks.

Properties owned by sovereign nations or those acting as refuges for victims of domestic abuse violence will also be exempt.

Discounts will apply to farmhouses on working farms and properties owned for charitable purposes.

The Treasury has been contacted for comment.