According to a recent report in The Guardian, the government may be preparing to scrap Stamp Duty and introduce a new form of property tax.
Senior ministers are said to have asked officials to explore alternatives, including a “proportional” national property tax on owner-occupied homes. This could eventually replace Stamp Duty, while a separate local property tax is also being considered as a medium-term replacement for council tax to support struggling local authority finances.
Although no final decision has been made, the report suggests that changes could come during this parliament.
What Could This Mean for Homeowners?
One proposal being modelled is a national property tax on homes worth over £500,000, payable when owners sell their property. The amount would be linked to the value of the home, with rates set centrally by government and collected by HMRC. Importantly, the tax would not apply to second homes, which would still be subject to traditional Stamp Duty.
The suggested move is part of Chancellor Rachel Reeves’ wider effort to increase revenue by drawing on what has been described as the ‘unearned’ capital appreciation of private housing stock.
The Government’s Position
A Treasury spokesperson responded to the speculation by reiterating the government’s focus on growing the economy rather than relying solely on tax increases. They highlighted recent planning reforms expected to boost economic growth by £6.8bn and reduce borrowing by £3.4bn.
They also stressed a commitment to “keeping taxes for working people as low as possible,” noting that the government has upheld its pledge not to raise income tax, National Insurance, or VAT.
