The UK’s property tax system is under growing scrutiny—and with a structural shake-up on the horizon, the Autumn Budget could deliver sweeping changes. Here’s a breakdown of the most talked-about proposals:
1. Replacing Stamp Duty with a Proportional Property Tax
Chancellor Rachel Reeves is reportedly exploring a national, proportional property tax to replace Stamp Duty on primary residences.
This tax would target homes valued over £500,000, with sellers—not buyers—paying it when they sell their home. Estimates suggest it would affect around 20% of property sales, compared to the roughly 60% currently subject to SDLT.
2. A Shift Toward Local Property Taxes
Looking further ahead, the government is considering a local… property tax as a replacement for council tax, which is based on outdated 1991 property valuations. Comprehensive reform in this area would likely take more than one term to implement.
3.Capital Gains Tax (CGT) on High-Value Primary Residences
Another idea under consideration is extending CGT to high-value primary residences—a sharp departure from current norms and Labour’s earlier assurances.
Background: Why Change Stamp Duty at All?
Stamp Duty (known legally as Stamp Duty Land Tax or SDLT) has long been criticised for discouraging moves, slowing market activity, and disproportionately impacting chain sales.
It’s seen as regressive, distortive, and hard to predict in terms of revenue generation. A move to proportional or annual tax models could streamline revenue and aid mobility.
What Could This Mean for You?
| Proposal | Who It Affects | Impacts / Considerations |
|---|---|---|
| Proportional tax on sales | Sellers of homes >£500k | Steadier revenue, lower friction—but needs fair rate setting. |
| Local property tax (council) | All homeowners | More reflective of modern property values—politically sensitive. |
| CGT on primary residences | Owners of high-value homes | Could disincentivise selling—risky for market fluidity. |
| SDLT rewrite (from April 2025) | All homebuyers, especially first-time | Higher costs, tighter affordability for many new buyers. |
No final decisions yet: The government is still evaluating models and rates.
Implementation likely phased: A national property tax might arrive within this parliament, but broader local-tax reforms would need more time—possibly a second term.
Balancing act: These reforms aim to raise revenue—potentially closing a £10–£20 billion fiscal gap—while avoiding tax hikes on income, VAT, or National Insurance.
Worth Noting: If You’re Buying Before April 2025… Stamp Duty Rules Are Already Changing
While these potential reforms are for the Autumn Budget, there are guaranteed changes coming into force on 1 April 2025:
- Main-residence buyers: The 0% SDLT threshold falls from £250,000 to £125,000, with 2% on the next band.
- First-time buyers: The 0% threshold shrinks from £425,000 to £300,000, and the relief cap drops from £625,000 to £500,000.
These changes are already underway and expected to reduce first-time buyer transactions by several thousand annually—but they may boost relocation activity amongst existing buyers wanting to capitalise before deadlines.
Final Thoughts
With the Autumn Budget just weeks away, the future of UK property taxation is in flux. Among the rumoured reforms:
- Proportional tax on homes over £500k, paid by sellers.
- Existing reform: SDLT thresholds scheduled to change on 1 April 2025.
- Longer-term ideas: Replacing council tax with a modern local tax, and expanding CGT to high-value primary residences.
Whether you’re planning a move, selling, or advising others, staying informed—and perhaps seeking professional advice—has never been more crucial.
