UK Treasury Plans New Property Tax on Homes Over £500,000

Chancellor Rachel Reeves is reportedly considering significant reforms to property taxation as part of efforts to address a large fiscal shortfall estimated at around £40-50 billion. One proposal under review is replacing the current stamp duty system with a new national property tax levied on owner-occupiers selling homes valued over £500,000, potentially affecting about one-fifth of the market. Additionally, Treasury officials are exploring the possibility of removing the current capital gains tax exemption for primary residences above a certain value, which could result in higher-rate taxpayers paying a 24% levy on gains. These measures come amid soaring government borrowing costs and a depleted fiscal buffer, which economists say will necessitate substantial tax increases in the upcoming Autumn Budget. The government has emphasized its commitment to protecting working people from tax hikes on income and national insurance, while also considering longer-term reforms such as local property taxes to replace council tax. Critics argue these proposals represent a wealth tax in all but name and warn of their potential impact on the middle class and housing market.