Chancellor Rachel Reeves is exploring the potential introduction of a national property tax to replace stamp duty on the sale of owner-occupied homes valued above £500,000, according to The Guardian.

Government officials are modeling the feasibility of a proportional property tax, which could be unveiled in the autumn budget as part of “a radical overhaul”. The plan, if approved, may take effect within the current parliament. In addition, ministers are considering a separate local property tax to replace council tax. Under the proposed system, owner-occupiers would pay HMRC a centrally determined rate upon selling a primary residence worth more than £500,000. Stamp duty would continue to apply to second homes. However, Paula Higgins, CEO of the Homeowners Alliance, voiced concerns about the potential impact: “On the suggestion of introducing a new property tax there shouldn’t be a money grab by treasury at the expense of homeowners. It’s an attack on homeowners and history shows that introducing a new tax is never followed by the removal of older taxes. In the interim the government needs to tread carefully. Uncertainty around property taxes causes paralysis in the housing market. We’ve just seen how damaging this uncertainty can be: in April this year, when stamp duty thresholds changed, transactions collapsed by 64% in a single month – the sharpest fall on record. Homeowners can’t afford a repeat.”

TV presenter Kirsty Allsopp, best known for her Channel 4 property shows, dismissed the timeline as unrealistic, writing on X: “It is August, anyone who thinks this can be done in a sensible, considered way by October is a moron.”

Data highlights how limited stamp duty exemptions have become. Currently, only 40% of properties in England are exempt, down from 53% in 2017. In London, just 4% of homes for sale avoid stamp duty, compared with 71% in the North East, according to Rightmove. Thresholds have also failed to keep pace with rising house prices. The £300,000 exemption for first-time buyers, introduced in 2017 when the average home cost £226,071, now sits against an average price of £268,652, an increase of more than £42,000. Meanwhile, the £125,000 threshold for other buyers has remained unchanged since March 2006, when average prices were closer to £150,000. 

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Source: Juliet Shaw, Today's Conveyancer