Chancellor Rachel Reeves is under fire after reports suggested she might be planning major changes to property taxes.
Critics argue the proposals could unfairly target middle-class homeowners, with some branding the plans a “wealth tax in all but name.”
What’s Being Considered
According to reports, Treasury officials have been asked to explore potential reforms to the stamp duty system.
One of the ideas reportedly being examined is a proportional property tax on homes valued above £500,000 when they are sold.
This would shift some of the tax burden from buyers, who currently pay stamp duty, to sellers — a move some property experts warn could destabilize the market.
However, sources close to the Treasury have denied that this specific plan is actively being pursued, stressing that officials are not using last year’s Onward report as a blueprint.
That report suggested dual national and local property taxes as a potential replacement for stamp duty and council tax.
The Political and Economic Context
The discussion comes as Reeves faces pressure to boost economic growth and address a projected £50 billion shortfall in public finances.
The Chancellor has reportedly asked officials to model the impact of a new national property tax system, with a possible rollout by the end of the decade.
Critics such as the TaxPayers’ Alliance warn that such measures would amount to a hidden wealth tax.
Conservative politicians, including Kemi Badenoch and Sir Mel Stride, have accused Reeves of targeting homeowners’ finances and warned that this could punish families aspiring to own property.
Property Experts Sound the Alarm
Property specialists have been vocal about the risks.
TV presenter Kirstie Allsopp criticized the Government for “punishing people” for the sacrifices they make to buy homes, calling speculation about new property taxes “destabilising.”
Mortgage advisers echoed these concerns, suggesting a new levy could depress market activity, reduce overall tax revenue, and further unsettle buyers.
Proposed Mechanics of a National Property Tax
While nothing is confirmed, reports indicate that a national property tax could apply to homes over £500,000.
Rates suggested by the Onward report included 0.54% for properties above £500,000, with a supplemental 0.278% for houses over £1 million.
A separate local property tax could replace council tax, levied annually on house values, potentially making the system fairer by taxing properties rather than residents.
Labour’s Broader Tax Plans
Pressure within Labour ranks to introduce a “wealth tax” continues.
Former Labour leader Lord Kinnock has proposed a 2% levy on assets over £10 million, while Deputy Prime Minister Angela Rayner has suggested hikes on corporate tax for banks and changes to pensions rules.
Reeves is also reportedly reviewing inheritance tax adjustments, prompting Tory accusations of “politics of envy.”
Government Response and Focus
Government ministers stress that Labour’s aim is to make “fair tax choices” and ensure sustainable public finances.
Treasury officials emphasize that economic growth, rather than tax hikes alone, is key to improving finances, highlighting planning reforms expected to add £6.8 billion to the economy and reduce borrowing by £3.4 billion.
What This Means for Homeowners
For now, homeowners are watching closely.
Any major reform could affect buying and selling decisions, property values, and overall market confidence.
While the specifics are still under discussion, the debate signals a potential shift in how property taxes could operate in the coming years.
