Rachel Reeves is contemplating the biggest shake-up of property taxation in a generation — a move that could scrap stamp duty on many home sales and replace it with a national levy, payable on properties worth more than £500,000.
Treasury officials are quietly modelling the idea, with insiders suggesting a “radical overhaul” could be unveiled in the autumn budget. The reform, if adopted, would mark an early attempt by the new chancellor to put her stamp on housing policy and test the government’s appetite for bold economic change.
At the heart of the plan lies a proportional property tax, levied on the sale of primary residences and paid directly to HMRC. Council tax — a perennial target for reformers, widely derided as outdated and unfair — may also be in line for replacement under parallel proposals. Stamp duty would remain in place for second homes and buy-to-let purchases.
But if the Treasury hoped to float the idea quietly, the reaction suggests otherwise.
Paula Higgins, chief executive of the Homeowners Alliance, warned that uncertainty over such fundamental changes risked “paralysing” the housing market. “There shouldn’t be a money grab by the Treasury at the expense of homeowners,” she said. “History shows new taxes rarely replace old ones. And we have already seen how damaging uncertainty can be: when stamp duty thresholds shifted in April, transactions collapsed by 64% in a single month.”
For others, patience appears even thinner. TV property presenter Kirstie Allsopp dismissed the idea that a workable plan could be ready by October. “Anyone who thinks this can be done in a sensible, considered way by then is a moron,” she wrote on X, adding that leaking proposals to newspapers was “not the way to go about” reform.
The political calculation for Reeves is a delicate one. Stamp duty has long been loathed, both for the sharp financial hit it delivers and for the way it gums up housing mobility. Yet it remains a lucrative source of Treasury revenue — more than £11 billion in 2023–24 — making any replacement fraught with fiscal risk.
The distributional picture adds another layer of complexity. Only 40% of homes in England now escape stamp duty, compared with more than half in 2017. In London, a mere 4% of properties for sale fall outside its scope; in the North East, by contrast, more than 70% remain exempt. A national property tax would inevitably touch voters very differently depending on where they live.
Nor have thresholds kept pace with soaring prices. The £300,000 exemption for first-time buyers, introduced in 2017 when the average home cost £226,071, is already losing its bite as average prices climb towards £270,000. The £125,000 general threshold has not budged since 2006, when the average was just £150,000.
For Reeves, the question is whether to gamble political capital on a reform that many experts say is overdue, but which risks triggering turbulence in a fragile housing market. Announce too little, and she risks being accused of timidity. Move too quickly, and she could preside over the very paralysis her critics warn about.
Either way, the battle over Britain’s most hated tax looks set to dominate this autumn’s budget.