The debate over Labour’s approach to property taxation has intensified, with reports suggesting chancellor Rachel Reeves is considering a capital gains tax (CGT) on profits from main residences.
Currently, homeowners do not pay tax on any profit made when selling their primary residence, thanks to long-standing exemptions. But according to The Times, Reeves is exploring a plan to change that rule — meaning homeowners could face a tax bill if the profit on their home exceeds a certain threshold.
This latest proposal comes on the heels of reports that the government is weighing up a radical overhaul of stamp duty and council tax, as it looks to plug a £51bn fiscal shortfall.
Critics argue such a move would not only erode the principle of a property-owning democracy, but also risk destabilising the housing market, especially in high-value areas where property appreciation is significant.
The Treasury has not yet confirmed any final decisions, but the rumours have already sparked fierce opposition from property professionals and homeowners alike.
Craig Fuller, founder, Craig Fuller Property, commented: “News that Rachel Reeves is considering abolishing stamp duty and replacing it with an annual levy on homeowners, while also introducing capital gains tax on people’s main residences, is complete madness. It would paralyse and depress the property market, discourage people from moving, and unfairly penalise those whose homes have simply risen in value over time.
“The government should instead be adjusting the brackets to stamp duty at the lower end of the market, as it was previously, and reintroducing multiple dwelling relief. That would stimulate transactions, support first-time buyers, and restore confidence at the foundations of the market.
“However, with the market having been more challenging over the past couple of months, even the rumour of these kinds of changes could be enough to shift behaviour. We have offers on the table that remain unaccepted due to hesitation, and I think this may prompt more people to say ‘let’s just get on with it.’ The uncertainty alone can be enough to push people into making decisions.”
Also reflecting on suggestions that Labour is looking at charging capital gains tax on main residences above a certain threshold, Tom Bill, head of UK residential research at Knight Frank, added: “One key question is when any gains would be calculated from. Based on the last decade, I’d be surprised if there was anything to tax at the top end of the property market given that prices in prime central London are down 20% over that time. A tax that reduced demand further would therefore also affect the prospect of future gains and could be self-defeating.
“If CGT applied from when the property was last bought, it would divide sellers into two groups – those sitting on a gain and those who are not. Anyone with a taxable gain would think twice before selling, which would reduce transaction numbers.
“The government seems to want a predictable flow of revenue that is skewed towards the wealthiest homeowners. That would be best achieved by re-banding council tax rather than introducing transaction taxes that change behaviour in the most discretionary part of the property market to the point they fail to raise what is intended.”
What impact could new capital gains tax proposals have on your local housing market?
“Keir, Keir — brilliant idea: punitive tax the prudent.”
Because nothing says fairness like targeting the people who bought modestly, stayed put, improved their home, and didn’t borrow against it.
Ignore the speculators. Ignore the offshore buyers. Go straight for the ones who did everything right.
It’s not tax reform. It’s a moral failure — dressed up as policy.
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Needless to say Labours approach to tax the people who already paid their tax – be it property, pensions etc. Surely the best way to strengthen public finances is by growing the economy — but taxes on small businesses & the like are good feeding grounds for this government.
A HNWorth purchaser at £5 – £10m + will inevitably accept a higher SDLT payment for reasons to live in the UK be it political or business reasons – alas Labour have created these individuals their exit path from the UK.
A closer look at immigration costing the UK millions daily, careful reforms on council tax, FTB assistance…. the list endless as with Labour clueless.
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Surely this will just paralyze the property market at whatever rate it is set at?
And its all rubbish anyway cos in the intervening years all property has appreciated. Its not like your house did it in isolation. If you bought in the 90’s for arguments sake at £100K there is not a cat in hells chance you could buy the equivalent property for the same amount now.
And its another way of going after ordinary people who thought at least when they retired and downsized they would have a bit of money to live on cos state pensions are rubbish – in fact unless you are very rich most pensions are rubbish. Guess what – if this comes in I wont be downsizing anytime soon and losing that money to another money grabbing tax. Surely if you want a vibrant economy you need to make moving for whatever reason easier not more difficult for people to do.
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For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
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This is becoming insane.
The answer to every single economic issue the UK faces is contained within economic activity. Or rather the lack of it.
This Gov is doing the equivalent of running a business that is losing custom rapidly. Then, instead of going out for more custom they decide to strategise how fewer and fewer customers can each be charged a bit more each time.
With that customer base dropping by the day.
Absolutely, totally insane.
GDP is essentially flat. The UK’s borrowing costs are increasing. Oh, and we are £3trillion in debt.
There is NO taxation answer that ultimately doesn’t result in UK bankruptcy. Maybe not in the next 2/3/5 years, but eventual, is guaranteed
Very, very simple economic logic is all that is required.
If we continue like this we are truly F*#ked.
We have to have a strategy and plan to stimulate the economy. Create growth. Create motivation and desire for the populace to work hard, succeed and be successful.
Might not sound fashionable now to say that. How else will you do it?
We need the populace to believe that hard work yields rewards. And so to go forth and build businesses, be innovative and generate activity.
This government quite literally doesn’t understand this. Which is, personally speaking petrifying.
This governments answer to a lack of revenue is to carry on with the very measures that are destroying this country.
The maths is simple here.
Outgoings too high. Can’t reduce them.
Need more money in. Can’t tax more as the tax take is already at historic highs as a proportion of income and activity. It’s maxed out
So, back to revenue.
Requires a healthy level of growth.
So, go figure how to do that……
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So, you pay stamp at the prevailing rate when you purchase your family home. You pay council tax every month as services decline and are taken away all togther. The bigger / more valuable your home the more you pay. You pay the most for the least.
You love your home, care for it, look out for your neighbours and create a good neighbourhood that others may want to live in. Each month you pay tax on your income and then pay a mortgage first forgoing other luxuries. You spend your life paying that mortgage off. You dont house flip, you just keep your house in a good state of repair, take pride in renewing and updating it, work hard in the garden each weekend when your not working your **** off getting ill with stress and anxiety. You hope one day the house is entirely yours and can enjoy it as you grow old or downsze when your legs wont carry you upstiars. Are we really saying this is now the target of our government, if so, shame on all that voted this mob in, you have damaged this councty more than any other voter thats gone before.
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Tax wealth not working people. Working people keep the economy going with their disposable income, if there is none of that there is no economy. How do they not know this?? Muppets.
Taxing assets like land, large commercial buildings, stocks and shares, is the one thing politicians are scared of as they are in the pockets of these billionaires. The record millionaires leaving UK story is fabricated also. These assets cannot be taken on a plane if they did decide to leave. There used to be a wealth tax in the UK before Thatcher hatcheted it, and then started selling all of the family silver. Neither party has stopped that trend since and here we are. But it is of course the immigrants fault. Yep, 1000%.
China clearly knows what they are doing with their economy, and you cannot own an assest there without paying tax. In France you cannot own farmland without being a farmer. Simple measures like this is what we need, not the same old ‘blame the foreigners’ or ‘tax hard work’. Why do you think the right wing billionaire owned media print stories about how awful the immigrant problem is, or woke, or LGBTQ+, or cyclists…. Hmmmmm. Anything but taxing wealth.
We need a party with a new message.
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Are they essentially saying that every property will be ‘Help to Buy’ and the government will own a stake in them all? Without the initial ‘Help’
A wonderful way to kill the market.
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I’ll stick my neck out and say that even THIS government, with all their hare-brained schemes wouldn’t implement something quite so stupid.
I do, however, think that they will announce something “watered down” though that will be met with some relief, which if announced in isolation, would have caused an equal amount of outrage.
This lot need to be voted out at the next opportunity. We can’t go on like this.
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