Chancellor Rachel Reeves is facing growing criticism amid reports she is considering radical reforms to the UK’s property tax system, including a levy on homes worth more than £500,000.
According to reports, Treasury officials have been instructed to examine alternatives to the current stamp duty model. One option under discussion is a “proportional property tax” that would be paid by sellers, based on the value of their homes at the time of sale. This would mark a major shift from the existing stamp duty system, in which buyers bear the cost.
Over the longer term, the government is also said to be considering replacing council tax with a new levy based on property value, paid directly by owners rather than residents.
The TaxPayers’ Alliance described the potential tax as “a wealth tax in all but name”, while property analysts warned that changing the current system could “erode buyer confidence” and raise less revenue than stamp duty.
Conservative leader Kemi Badenoch said Labour’s economic strategy had “killed growth”, leaving Reeves with a £50bn hole in public finances. “Her MPs won’t let her cut spending so now she’s inventing new taxes on your family home,” she added.
Shadow chancellor Sir Mel Stride echoed the criticism, warning: “This tax grab would punish families for aspiring to own their own home. Under Labour nothing is safe – your home, your job, your pension.”
The debate stems in part from an August 2023 report by think tank Onward, which argued that stamp duty deterred people from moving and called for a proportional property tax to encourage a more efficient housing market.
The Treasury has not confirmed whether any of the reported measures will be included in Reeves’ upcoming Budget, but ministers are said to be modelling the impact of potential reforms with a view to implementing changes before the end of the decade.