The Treasury is reportedly weighing up a new property tax on homes worth more than £500k, paid when owners sell rather than when they buy. Supporters call it fairer, while critics say it could hit ordinary homeowners in pricey postcodes.
Stamp duty could be replaced by a new property tax on homes worth more than £500,000, according to reports. The Treasury is said to be looking closely at the idea that would shift how we all think about buying and selling.
The new system would mean owner-occupiers hand over the tax when they sell their home. The amount due would depend on the property’s value, with the rate set by the Government. For some, it might feel like a fairer reflection of today’s housing market. For others, it could sound like yet another bite taken out of their hard-earned equity. And we want to know how you feel about it by taking our poll below.
Crucially, stamp duty on second homes would stay exactly as it is. The Guardian reports that no final decision has been made, but the idea alone is already fuelling plenty of debate about fairness, rising prices, and who should really be paying more.
If Chancellor Rachel Reeves does decide to go ahead, the announcement would land at a big fiscal event like the Budget.
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Under the current framework, buyers in England and Northern Ireland pay stamp duty when they buy property worth more than £125,000. The threshold is £300,000 if you’re a first-time buyer.
A Treasury spokesperson said: “As set out in the plan for change, the best way to strengthen public finances is by growing the economy – which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8 billion and cut borrowing by £3.4 billion.
“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”
Officials are also studying whether, after the national tax, a local version could eventually take the place of council tax. The idea would be to shore up the shaky finances of local authorities over the medium term.
A national tax could potentially be brought in during this parliament. Reforming council tax, however, would take longer – and would likely only be possible if Labour secured a second term in government.
These options are part of a wider Treasury project exploring how to tap into the huge rise in house prices over recent decades – a trend that has fuelled inequality and left council tax, still pegged to early 1990s valuations, looking increasingly outdated and unfair.
If these proposals were to get the green light, they could help strengthen Rachel Reeves’ political position. They would raise extra revenue without breaking Labour’s promise not to increase taxes on working people, while also being the kind of measures that many Labour MPs and members would support.