Rachel Reeves considering charging CGT on sale of main residence?

anyone who flips should, in the current rules, pay income tax not cgt on the gain.

if you buy an asset with the sole intention to sell it for a profit - that's trading and is subject to income tax.

the problem is most will report a cgt gain, and Hmrc are woefully understaffed and don't catch nearly enough of them.

Okay… but, you’ve now opened the door to the possibility of losses from a CGT perspective. Many extensions are done to make the property more liveable, but after taking into the account the costs (for which a home owner, unlike a developer, cannot recover VAT) there is often not a commensurate rise in value because the cost of building work is so high. Now the owner has a tax loss to offset against other gains. A net outflow from the treasury.

In a falling market, which is what they are creating by taxing all property gains above whatever threshold they decide, there will be also be many more people who then have losses for CGT purposes. So until the market rises, which will be after they have been long gone, that will also just reduce tax revenue.

CGT is just a tax on inflation for those who hold assets for a long time, which is a tax on the governments inability to manage the economy. It’s just not logical. Which I agree with you, is probably while they’ll do something! But it’s economically illiterate, and will cost tax revenue not increase it in the short to medium term for CGT, VAT and stamp duty as a minimum.

Now would be the time to do it if it’s worth a lot

I’m suspicious this is going to impact harshly and more on women. Let’s say you’re a separating couple and you have a joint property and that has to be sold to give a share each towards a new place. How much less do you now have, after a tax like this, to get a room for your kids in a new place? You’ll likely have less earning power (or money to spend) if you need to cover your own childcare and not share it with your partner because you don’t live together any more. And so on and so on. What account will be taken of this so that single parent households aren’t punished? Also I don’t want the country to be somewhere where buying and selling and moving is unaffordable. We want economic growth and a skilled workforce which often needs a mobile workforce.

Jesus fucking Christ

At least just tax those with properties over £1.5K who also have a decent pension pot

Not those who are relying on selling their homes with no pension in place who will then lose precious money they’re currently intending on living off when they do hit retirement age

FFS

Good point
So many people complaining the elderly should down size, what to exactly with so many people extending

Its peeves me off that people are clearly extending and making money on those extensions yet very few think they should pay cgtax on what is basically development!

Yet As soon as someone who did nothing to their house but live in it all their lives sells they think they should be taxed
To much mememe in this country

My parents have been thinking of downsizing their London house but i doubt they will if this happens!

I agree. Particularly in the case of adding another storey to a bungalow when they’re like hen’s teeth. The shortage of bungalows is a real impediment to downsizing.

It’s development
No different from a business doing it
It also reduces smaller property housing stock making it harder for people to buy
I think it’s right to tax development and If less are extended as a result it’s a win win for helping people afford a home

Except the income tax and NI they’ve paid on the money earned to pay for the extension, the VAT they pay on the cost of the building work, the higher council tax that eventually flows from a bigger property, the higher VAT take that comes from increased energy used by a larger property, the planning application fees necessary to build the extension and the stamp duty paid when the next person bits it. And the PAYE, Corporation tax, NI paid by the firm that builds the extension. Yes, apart from that, no tax is paid ;)

Now, you could try and collect CGT on the uplift as well, but either less work will be done, which impacts tax revenue, employment and growth right now for a potential tax slice in the future, but there will be fewer moves and less stamp duty and CGT as a result..l

DH’s parents’ first family home (two bedroom basement flat in South Kensington, round the corner from NHM, bought in the late 60s) is almost certainly worth much more than £1m now. I don’t know exactly how much they paid for it, but given the average house price in London then was £4400 and this was only a flat, probably £2-3k.

Sadly they sold it in the 70s!

You had to buy a house on a single income because only men’s wages counted. Building societies didn’t allow women’s incomes to be taken into account.

Well, no. Because you used to be able to buy a house on a single income and now you can’t, unless you’re lucky or very well paid.

Wages didn’t keep up with house prices then either. During 1971 to 1973 house prices doubled in two years. Women’s wages didn’t count towards a mortgage either. So the ratio was 4 x one wage, now two wages count so it’s 4.5. It’s really not so different.

The entire issue is that wages aren’t keeping up with house prices.

Houses in 1975 averaged £11,300. The average salary was £2,900. House prices were around 3.9 times the average salary.

Now, in 2025, house prices average £280,000-£290,000. The average wage is only £34,000. That’s around 9 times the average salary. In London, it is much, much higher.

The housing market is on the brink of collapse, and part of it is because of people hoarding wealth in property.

I don’t live in London so my property hasn’t gained anywhere near that amount just through house price increases. My property has increased in value but I’ve lived here for 15 years and in that time have put in new kitchen new bathrooms new roof, new driveway, patio, windows, garden, solar panels, boiler and radiators, hardwood floors, full rewire. So yes it’s increased in value but only partly due to increases in the market and way more due to the work I’ve done on it (which I don’t have receipts for).

for me personally I just won’t downsize ever. I will give my kids as much of my cash as possible until I’ve run the pot right down and then the house will be dealt with under the IHT rules.

I wonder what proportion of the children collecting their GCSE results tomorrow will live in a £1.5mil house when they reach 70.

When I collected my O level results the average house price was £3554. If you’d told anyone then that a house that wasn’t a stately home would ever cost £1.5 million they’d have laughed uproariously at you. I expect a lot of those kids will but inflation will probably mean they’re earning £250k for a basic job - always assumed that AI hasn’t eliminated them all.

Your new kitchen etc is not going to account for the 677% increase.

In any event the cost of capital improvements can be deducted from the gain.

I just find it baffling that people have seen HUGE increases in their house value and think they should get to retain all of that gain without doing much work at all?

But many people have spent lots of money improving their home so that it does rise in value. The increase isn’t always just the effect of increases in the housing market particularly when you take inflation into account. How is anyone going to remember the exact cost of their kitchen 20 years ago or the cost of the plants they have put in the garden etc. it’s fine if you bought an investment property which you always knew was subject to cgt since you’d have kept detailed records. This would crash the property market or at the very least cause it to stagnate. Decrease the number of family homes available, disincentivise people from spending money on improving their homes thus also impacting the building/electrical/plumbing /decorating/landscaping etc businesses, put many people into significant financial difficulties, etc etc. it isnt the solution.

You don’t think it will be introduced and then be shifted down to include everyone? Or that the cliff edge will bugger up the fluidity of the market for the chains that dangle from the expensive houses? You think that you not owning a 1.5mil house means you are off the hook and there will be no affect on the wider market? Or that inflation will not drag more and more people in every year. I wonder what proportion of the children collecting their GCSE results tomorrow will live in a £1.5mil house when they reach 70. It’s hard to say but I’d bet diamonds it’s significantly more than today. Look at the drag from income tax thresholds - people moan but nobody really expects them to keep pace with inflation or wages.

Yes but what’s hard to understand that these gains come with 0 work. None. Even houses that are falling apart sell for a huge amount of money. If you stick your money in a fund and it gains a massive amount, you have to pay CGT. If your other assets become valuable, you pay CGT. The primary residence relief never took into account the huge house price increases we’ve seen. 677% in London in the last 50 years.

I’m alright guv..

It is if it’s only houses sold for more than £1.5 million.

It also impacts disproportionately on those who haven’t moved recently. If youve lived in your house for thirty years you will in All likelihood have a fairly chunky gain if you sell next year. If you’ve moved multiple times and have only lived in this property for a year you have pocketed each gain as you’ve gone along and so you’ll escape the effect.

65% of UK homes are owner occupied. It’s not a niche issue.