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.

I have the same question on the maths. Having read the article it isn't clear about how this is proposed to be implemented. But if we assume as some PP are suggesting it is an abolition of council tax and stamp duty and a yearly property tax that only due on sale of that property at a certain rate: then the PP who quoted it would be a 2.7k per year tax upon sale versus a 43k stamp duty charge on purchase. Then surely the monies in are less?! I mean even 10 years paying CT in that property would be 27k.

Particularly if the whole idea is to reduce house prices and create movement in the market?

If I had a house and had £2-3k spare a year (no council tax) in lieu of what is an effective onward depreciation of the capital, in addition to house prices are going down (that I would never have to worry about unless I sold) then surely this very much less money to the government in the short term and I'd wait it out? Again let alone how all this gets implemented which would be hugely costly.

I'm curious. I don't have a property that is over the threshold but from reading posters maths this doesn't seem to make sense to me? Let alone the costs of implementing any of the most basic options this might manifest.

A good proposal that is well worth exploring, the council tax system certainly should be modernized and, if it replaces stamp duty, there's every chance it could be for a more liquid housing market, which can only be a good thing for boosting productivity.

I want to downsize in the next year or two. As I'm in SE, there might not be much point. Maybe I'll just sell up and move abroad, I'd get something a million times better for the price!

As I understand it, they are proposing two new taxes. The tax due when you sell the property would replace stamp duty. There is then a other separate tax that would replace council tax.

Ok thank you. So every home owner with an asset (I am presuming not that which is borrowed against a mortgage) over 500k would be due this onward tax?

The article states it won’t raise any more money. ??? So why waste money implementing it. I really don’t see the point. What am I missing ?

@SimoneHere you mentioned you have this in Scotland. What are the thresholds and %s
As Simone noted it will mean people won’t bother downsizing. That will be an issue for families

Having a mortgage on the property is irrelevant. The tax will be based on what you’re selling it for only.

I think it will stagnate the market with people not downsizing

I wouldn’t bother. ( depending on % cost of course which we haven’t been told )

If it's irrelevant do you mean the difference or the actual sales price? E.g I "own" a 500k property...but I borrowed 300k and still owe it so I actually only "own" 200k. Would that tax be applied to the 500k or the 200k?

The Governments own predictions clearly show the increases and clearly state predicted growth is unaffordable
Its all in their own research on the Government website

How much you borrowed and how much your actual equity will be when you sell has nothing to do with the properties sale price
The tax will be on the properties actual sale price so £500k in your example
( It’s basically the same as how capital gains tax is calculated )

Usual piss poor reporting from the Guardian

The proposal has come from the Onward “Think Tank” and Tim Leunig its chief economist

It is explained properly here

https://ukonward.com/reports/a-fairer-property-tax/

I had no idea the basic rate of income tax was 33% then raised for the first time in 1975 to 35%

Our parents were paying so much more than us.
Im guessing it was lowered to get votes !

Thanks. In that case, it makes absolutely no sense to me. As why would we put our future government potential tax income into a future onward tax initiative (market variables which this policy alone will create) , dependant on so many variables? With no data driven improvements? Particularly one which is to supposedly about reducing house prices at the same time as making an actual future forward tax bill leveled against that house. Any cost of implementing it as well which will be huge. Which has to come from somewhere?

If the funds are available to implement this then surely some of those funds could be put to creating ideas and solutions for more social housing.

She is looking at proposals to replace stamp duty and council tax, yes. It's certainly not policy at the moment.

There was a top rate of 90+% in the 1960s.

Well that’s even worse than OPs article with
. stamp duty as a yearly tax over £500k value
. plus a yearly proportional tax rate of properties over £500k
The proportional tax rate could be 0.44% + 0.54% ie 0.98% ( let’s say 1% )

So a house of
£600k = 800 + £1000
£800k = 800 + £3000
£1mill = 800 + £5000

for those over £1million it could go to 0.81% +0.44% ie 1.25%
so
£1.5 mill = 800 + £5000+ £6250

Those are some chunky bills and central Government can easily raise their share so easily. Which I’m guessing they will

How anyone in London for example or living in historical houses can afford this I have no idea. Take a look at these figures. !!!
There’s probably more taxes I’ve missed but I’ve given up looking now

I can’t see a tax on moving in this though unlike OPs attachment

I think Tim Leungs personal opinions on his own policy are just that. My my he does like to blow his own trumpet

Chicken. Ops article is different from FullofLemons
in which case it doesn’t look like there’s a tax to sell or buy
just
even more wealth taxes ! and higher taxes on those living in more expensive properties

The problem with the new tax proposal is once you've owned a house worth over £500,000 for a few years the amount of tax accrued rises to more than you'd currently pay in stamp duty. So there is every incentive to never move or sell.

On a good note for those of us who’ve already forked out ££££s in Stamp duty if you’ve paid it once you won’t be taxed again
This means the Govn will lose millions waiting for us all to move.
Not a great idea in the short term as sales will stagnate

Terrible.
No family needs more tax to pay.
Housing is already too expensive for the younger folk and older folk should be left as much equity in their homes as possible - they have purchased it. They have earnt the right to help out their grandchildren with inheritances, and to support their own old age too..

Stop allowing population to expand with influx of migrants.

No, the tax wouldnt accrue.

People with homes or more than £500k would:

• pay a one off fee when the sell; and
• pay an annual tax, at a higher rate.

It would almost certainly incentivize downsizing, and make things easier for first time buyers.

Ok. I worked out that the proposed annual property tax on our home would be exactly the same as we are paying now in Council tax in Band E. Seems a lot of expensive reorganisation to pay the same amount of tax.

People say they want the economy to grow. The economy doesn't grow without enough people and skills to do the work or places to house them and infrastructure to serve them. But people don't want more people and development around them, and obviously it affects the environment and green spaces. This is the problem.

Well, maybe the proposal isnt based around you specifically...

For most people, it would mean significantly lower taxes. It shifts the tax burden out of poorer areas into wealthier ones.

Re. the OP's specific concern - yes - it will add to the tax burden of those already living in expensive areas, like the South East - but even in the SE of England, about two thirds of homes are below the £500,000 threshold.