Chancellor Rachel Reeves Plans High-Value Home Tax to Address £40 Billion Deficit

Chancellor Rachel Reeves is considering significant reforms to property taxation as part of efforts to address a £40 billion fiscal shortfall. Key proposals include ending the capital gains tax exemption on primary residences above a certain value—potentially around £1.5 million—and introducing a new national property tax on homes valued over £500,000, which would replace stamp duty and potentially council tax. Experts warn these measures could slow the housing market, discourage downsizing, and reduce government revenues due to decreased transactions, particularly impacting high-cost regions like London and the South East. Public opinion is divided; many homeowners argue that a £500,000 threshold unfairly targets middle-class buyers in expensive areas, while supporters believe taxing unearned property wealth is necessary to address inequality. Critics also caution that pensioners and modest-income households could be disproportionately harmed, and there are calls for regional variations or higher thresholds to ensure fairness. Overall, these proposals aim to modernize a complex and outdated tax system but face significant debate over their economic and social consequences.