UK Property tax – what’s the Chancellor’s next move?
With Rachel Reeves ruling out increases to income tax for working people, the Treasury has turned its attention to other revenue-raising options. One idea now gaining traction is a major shake-up of UK property tax — including the possibility of a new national property tax running alongside Stamp Duty Land Tax (SDLT).
UK Property tax – what’s on the Chancellor’s table?
Reports suggest that the Chancellor is considering a brand-new levy on homes valued at over £500,000. Crucially, this would not replace SDLT on residential purchases, but actually sits on top of it — creating another layer of taxation for property owners in certain brackets.
Adam Thompson, our Private Client Tax Partner, added “SDLT has long been a vital revenue stream for the Treasury. In 2024–25 it raised £13.88bn, a 20% increase on the previous year. It’s easy to see why the Chancellor is reluctant to tinker with such a lucrative tax — but layering on a new charge could have real consequences for the property market.”
Changes to UK property tax – who would be affected?
The threshold of £500,000 might sound like a ‘high-value property’ measure, but in reality, many average family homes would be caught — especially in London and the South-East.
- Average London flat: £449,000
- Average London terraced house: £638,000
- Average new-build in England: £446,000
- Average detached home in England: £467,000
With values rising steadily year-on-year, it’s clear that a large proportion of homeowners could soon fall within scope.
Changes to UK property tax – the challenge for the Chancellor
Introducing an additional property tax is not straightforward. As Adam Thompson points out: “The Chancellor cannot risk a policy that freezes the property market. Reductions in SDLT have historically spurred activity, encouraging transactions and helping first-time buyers access the market. Any replacement or new tax must work to stimulate, not stifle, movement.” Adam also raises questions around fairness: “What happens to homeowners who recently paid SDLT under the current system, only to see a new property tax applied soon after? Will there be transitional reliefs, or could this reshape the market overnight?”
Changes to UK property tax – alternative models under discussion
Think tanks such as Onward have previously proposed wide-ranging reforms, including:
- A proportional national property tax on homes over £500,000 (with higher rates for properties above £1m).
- Replacing council tax with a value-based levy, paid by homeowners rather than tenants.
- Minimum contributions of £800 per property to fund local services.
The so-called “mansion tax” has also resurfaced — though in today’s market, £500,000 barely buys a one-bedroom flat in parts of London.
UK Property Tax – why reform it now?
The last significant SDLT overhaul was in 2014, when progressive banding was introduced to remove cliff edges at certain price points. Since then, critics — including the Institute for Fiscal Studies — have called SDLT “exceptionally damaging”, arguing it discourages transactions and distorts the market.
With more than a third of SDLT revenue currently raised from homes worth over £1m, the Chancellor faces a balancing act: secure tax revenues while avoiding a brake on mobility and growth.
UK Property tax – let’s look ahead…
The Autumn Budget, expected late October or early November, will be the next key moment for clarity. For now, speculation continues — but one thing is certain: property owners and prospective buyers alike will need to keep a close eye on developments.
At RPGCC, we are tracking these discussions closely and working with clients to prepare for potential reforms. Adam added “In a fast-changing tax environment, planning ahead is crucial. Whether you’re buying, selling, or simply holding property, understanding how policy shifts could impact you is the first step in protecting your position.”
If you would like to speak to a member of our private client tax team or arrange a free initial consultation, contact us or telephone our switchboard on 020 7870 9050 where a member of our team is waiting to assist you.
