Reeves' plan to tax houses over 500k

[FridayFeelingmidweek]

Just been reading news about Reeves's plan to tax https://www.theguardian.com/money/2025/aug/18/rachel-reeves-stamp-duty-property-tax-council-tax

AIBU to already be worrying about living in the south east? Surely this will force people either to never move, or move away from SE/London.

I'm glad that there is finally something that isn't negatively affecting areas outside the SE but does she actually understand that 500k isn't much down here - 3 bed terrace at best.

Well at the moment if Mary from Manchester gets offered a fancy job in London, sells a £300k house and buys a new one for £1m, she pays a stamp duty bill of £43k.

Realistically Mary probably says “sod that” and doesn’t take the job.

Under the new system proposed here she pays zero.

Under the new system she would crystallise a deferred property tax, sure, but she’s liable for that anyway in the end.

The crucial point is that today’s stamp duty is entirely avoidable by not moving house, so mostly people don’t - even people whose current house is too big or too small for them or who could get a better job elsewhere.

The new tax on moving would be zero, so people are likely to move far more often.

.

Every other OECD country manages it. 0.5% is fiscally neutral.

In general they take the purchase price of your property and then have it go up with the local average for similar properties sold prices. If you have planning permission for substantial work on the house then an evaluator comes round from the local council and reassesses once it’s done. People can challenge the valuations but they have to pay for the evaluation if it stays the same or goes up.

A lot of us will. We’re boomers and we’re going to be gone in around 30 years. Many, many houses will be probate sales.

The devil will be in the detail, but in principle I would support a revamped property tax regime that achieved these two objectives (which is what the report is aimed at):

1. Make council tax fairer across the country so that people in poorer councils are not paying significantly more than people in affluent ones (as they are currently); and

2. Shift the burden from buyers to sellers, which effectively means that first time buyers don’t pay tax but there is an equivalent tax instead on somebody’s final sale. The winners for this would obviously be first time buyers. The losers (on paper) would be people transferring property for the last time - eg to move into a care home / after a death. But, in practice, those people will often have paid very limited tax when they bought their first home, so it may be a price worth paying to help first time buyers given the state of our property market.

Ultimately, though, I can’t see the current government being bold enough to change the current system so comprehensively. Far more likely that they will just introduce some kind of compromise that makes little to no difference to most people and will swiftly be reversed by the next government!

Council tax is a bit bonkers, I am paying the same for a 3 bed rented HA house in the North, as a property on Band F in Hammersmith and Fulham.

The biggest mistake they made to the housing market in recent years (after not replacing council houses) is not letting the crash happen in 2008. The bolstering of the housing market means it’s all on glass now. If it had dropped then it would have hurt but it would have been tiny in comparison to the pain that would need to happen to correct things now.
now. It can’t happen.

Mary moving to London needs somewhere to buy. If sellers see moving as having to pay lots of tax they won’t move.

House price valuation can be done. Zoopla isn’t too wide of the mark usually.

If she hadn't lied about her CV perhaps people wouldn't be so "rude". She kind of opened the door to those names by lying.

I would rather the person running our economy hadn't told significant lies about her career.

In the run up to the election Labour made a big deal about her previous experience and gave the impression that after the years of Tory chaos she would be a safe pair of hands. Then we found out it parts of her CV were bullshit and she is even worse than Liz Truss.

How do we have someone even worse than Truss running the economy?

The con with this is that most of us, in fact all of us, over £500k will end up paying twice. Because we have already paid the stamp duty in the purchase of the property.

Well I was answering a point which said the planned taxes massively reduce the cost of moving and I said that it will of course cost the seller. But that same seller wouldnt now be paying stamp duty, whereas they would have done previously on the next property. It makes no odds to them.

But its a ridiculous comparison to say that someone would refuse to work based on paying their rent to a landlord because someone who is pissed off at the potential new tax wonders to themselves 'whats the point in working'.

I think that lacks nuance @soupyspoon

Certainly young skilled workers are increasingly looking abroad because they want to work but they want to feel they are getting some value for that work. What em are we offering? Low wages, high taxes and high housing costs..

I also think the way we treat renters in this country is very demoralising to renters.

So….when NI was hiked up employers reduced their hiring practices. Unemployment has increased.
When you have cliff edges at 100k what happens? Many choose to salary sacrifice to avoid marginal tax rates. Tax revenue decreases.
Surely, in this scenario the consequences could be two fold - a drop in sales at this level. A drop in house prices if the council tax burden is excessive. The consequences of that would be far reaching for those who have recently bought at this level.
What a disappointing but entirely predictable, policy.

@FatherFrosty we never recovered from 08, the chickens are coming home to roost now.

Considering that a huge number of properties in the SE fall over 500k, its not about probate primarily. There will be some of course. My parents are nearly 90.

Oh come on.
She’s not worse than truss.

Because in a civilised society those who have more support those who have less?

More and more it's just feeling like those who work support those who don't.

There will be many families in the SE with a mortgaged 500k house and barely scraping by, because that's where their jobs are, they need a roof over their heads and that's what they cost.

It's ridiculous to suggest that people in 500k houses are the wealthy. It's the squeezed middle being squeezed some more.

"Under the new system proposed here she pays zero."

I don't think that's correct.

"...and buys a new one for £1m, she pays a stamp duty bill of £43k."

In that situation she would be looking at paying a proposed charge of £2,700 per year in place of the stamp duty.

A whole lot better than £43k upfront, but not actually zero.

Do you though?

in Ireland, if you earn more than £38k you pay around 47% all in, higher than £65k and you pay 51% all in.

separate thread saying how much better the services are in Ireland than the UK, but we pay much more tax on earnings.

There will be a lot. The next 30 years will see the biggest transfer of wealth this country has ever seen.

I said as much earlier on, wtte, on repeat.

Apart from the millionaires and billionaires? I think a wealth tax might be an idea.

Well we don’t yet know what this idiotic government will do however..

Wouldn’t this simplistic little idea stop people selling / downsizing? Surely that’s the opposite of what the uk needs.

Why don’t Labour bite the bullet and increase the basic rate of income tax?

‘The direct tax burden on average earners is below where it has been for most of the last 50 years. There is even less truth than usual in the simplistic mantra that any additional taxes should come not from “working people” but solely from those with the “broadest shoulders”

That’s just another example of the long political tradition of pretending that “we” the people, can have our cake while “they”, the others, pay.

No country raises more tax than we do without taxing working people more than we do.

Lumping yet more taxes on high earners and companies will put at risk the growth the government says it is so keen to foster.’

They also need to look at the fuck up that is ADHD claimants on billions of benefits ‘£3.5 billion:
The Telegraph indicates that the annual cost of benefits for anxiety and ADHD-related claims is £3.5 billion.

• Doubling since 2020: The cost of these claims has more than doubled since 2020, highlighting the increasing burden of these conditions on the welfare system.’

That cannot be right. Sorry.

Properties that have had stamp duty paid on purchase are excluded. This would only apply when you buy a house in the future and, instead of paying stamp duty on your new house you have to pay an annual charge.

Also wealthy people pay vast amounts of tax already. You are just ignorant of the statistics.

Some wealthy people pay alot of tax, some don't.