Contemplates Swapping Stamp Duty with Tax on Property Transactions - Rachel Reeves' Proposed Change
The UK government is gearing up for significant changes in property taxes, with the Autumn Budget 2025 expected to bring reforms aimed at boosting tax revenues and simplifying the current system.
According to reports, the government is considering replacing stamp duty with a national property tax and potentially introducing capital gains tax (CGT) on more residential properties.
Under the proposed stamp duty overhaul, sellers would pay a new annual tax based on property values. For instance, properties valued over £500,000 would attract a rate of 0.54%, while those valued over £1,000,000 would be taxed at 0.81%. This change, if implemented, would affect fewer transactions compared to the current system, with around 22% of property sales being impacted.
Regarding CGT, the proposed changes could extend liability to homeowners selling properties worth £1.5 million or more. This contrasts with the present CGT rates of 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers on property gains.
In addition to these changes, the Onward think tank has suggested replacing council tax with a more proportional annual property tax. This proposed tax would average around 0.44% of property value for properties below £500,000. The reform aims to create a fairer and more efficient property taxation system.
It's worth noting that the exact details of the government's plans are still unclear. However, reports suggest that Chancellor Rachel Reeves is considering a new levy on the sale of homes worth more than £500,000.
The proposed reforms have the potential to be divisive, with concerns about their impact on the housing market liquidity and affordability. Some experts, like Alice Haine, suggest tax breaks for those moving to smaller properties and greater support for first-time buyers would be more effective.
Moreover, the current council tax bands are outdated, with house prices having risen significantly since 1991. This could lead to sellers underpricing homes to avoid the new tax or inflating asking prices to offset the cost.
The proposed reforms could also take time to take effect, possibly requiring Labour to win a second term in office.
As the Autumn Budget 2025 approaches, the housing market and the general public eagerly await the government's formal announcements on these proposed changes. With the average house price in London now standing at £566,000, a typical household could potentially be affected by the new property tax system.
Read also:
- Condor Reveals Q2 Results for 2025 and Secures a $5 Million Bridge Loan
- More than half of British homes adhere to insulation standards established during the 1970s.
- While Éowyn's storm caused a massive €301 million in damages, fossil fuels maintain their position as the leading power source.
- Transition in Energy: Merz Administration Plans Enactment of Heating Revolution from 2026
