Rachel Reeves’ Property Tax Shake-Up: What It Could Mean for Homeowners

 UK Chancellor Rachel Reeves is exploring major changes to property taxes. Proposals include shifting stamp duty so that sellers of homes worth over £500,000 pay it instead of buyers. Another idea is a capital gains-style tax on luxury property sales above £1.5m.

 A more radical option is a proportional property tax, where owners of homes above £500k pay a tax based on value, either when selling or as an annual property tax. While these reforms could help first-time buyers and upsizers, downsizers—often near retirement—may find themselves worse off, either paying upfront or seeing pension income hit by yearly charges.

 Longer-term, reports suggest council tax reform, potentially replaced by a new local property tax on homeowners only. Renters could benefit, but landlords face yet another financial squeeze on top of higher mortgage rates and reduced tax relief.

 No doubt this announcement is to test the water before the budget in October.

 History shows that when governments tinker with taxes, the public often pays more. As Dominic Frisby highlights in his wonderful book Daylight Robbery, reforms rarely benefit the people. It’s like the fairy godmother takes with one hand, and the wicked witch takes (usually more) with the other.