The UK Treasury is reportedly considering replacing stamp duty with a new property tax targeting homes valued over £500,000. This potential shift could significantly reshape the property market and how buyers and sellers approach transactions.
Under the proposed system, owner-occupiers would pay the tax when they sell their homes, with the amount based on the property’s value and tax rates determined by the government. This approach aims to better reflect current market realities, but it has sparked debate over its fairness and impact on homeowners’ equity.
It is important to note that stamp duty on second homes would remain unchanged under this plan. While no final decisions have been made, the possibility of this new tax is already stirring discussions about housing affordability, equity, and who should bear the tax burden.
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If Chancellor Rachel Reeves endorses the policy, the announcement could come at a major fiscal event like the Budget. Presently, buyers in England and Northern Ireland pay stamp duty on properties costing more than £125,000, with a higher threshold of £300,000 for first-time buyers.
A Treasury spokesperson emphasized the government’s focus on economic growth rather than raising taxes on working individuals, highlighting recent planning reforms projected to boost the economy by £6.8 billion and reduce borrowing by £3.4 billion. The government also maintains its commitment to protecting working people from increases in income tax, national insurance, and VAT.
In parallel, officials are exploring whether a regional property tax could eventually replace council tax, aiming to address the financial challenges faced by local authorities. While a national property levy might be introduced within this parliamentary term, any council tax overhaul would likely take longer and depend on Labour securing a second term.
These proposals reflect a broader Treasury effort to capitalize on the dramatic rise in property values over recent decades, a trend that has heightened inequality and rendered outdated council tax valuations increasingly unfair. Should these measures move forward, they may reinforce Rachel Reeves' political position by generating revenue without raising taxes on working individuals and aligning with Labour party priorities.