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.

You can't grow and economy without spending. Did you pay for your house outright? So you understand the concept of spending for the future.

This massively incentivises a family to keep hold of the property of a loved one when they go into a care home until they die. This incentivises homes to lie empty. It makes no sense and needs to be scrapped. Can anyone think of a good reason WHY home owners deserve a bigger IHT nil band compared to renters?

So you think having a home you haven't paid for is the same as paying for a higher level service than the one you'd otherwise get?

Ok.

Great, totally comparable example.

Most jobs are in London, especially high paying ones. Commuter towns also have high property prices, people aren’t idiots.

people have kids, kids have school and nursery hours so most people cant commute for 2 hours a day one way

There is too much concentration in one city.

We looked at leaving London but the travel costs were very high and logistically we couldn't make both jobs and school work.

We need the housing market to collapse because how prices have been ridiculously inflated for years. Greedy landlords are taking up everyone's income. If you paid what you thought it was worth, and plan to live in it, it shouldn't bother you. If you bought so that you could make money off people's needs for shelter, that's your own fault. Anyone want to buy a tulip?

What part of my answer are you questioning?

Online sources for my numbers include the Office of the Governor of California, Wikipedia, and Thought Economics.

California’s world economic ranking is an understandable source of pride only partly owing to Silicon Valley. As these sources show, the GDP of Silicon Valley is consistently around 20% of the GDP of California, with the latter around $4.1T in 2024. Impressive, to be sure. But the market caps you quoted are not the real story.

Speaking of sources, please provide citations for your info on Meta developer compensation.

I agree that too many adults of working age draw benefits. However any fix for this must protect the truly vulnerable.

Well your justification was "Especially when you are ALREADY being taxed on income and already pay income tax. Its taxing the same thing twice". Which is exactly the same situation: I pay my taxes for state schools already but now i am also paying an extra tax to fund state schools. Oh except I'm not because the money I'd going into housing not schools.

Anyway, your argument was about double taxation, well that's exactly the same as the Education Tax.

A mortgage is paying for a higher level house than you would otherwise get. So yeh, if it's OK to tax the education of children then it's OK to tax property, unless you think property is more important than education?

They have a plan for that:

What are Labour’s plans for giving foreign nationals the right to vote?

Keir Starmer has said it ‘feels wrong’ to stop people who live and pay tax in the UK from voting, but what is he proposing?

https://www.theguardian.com/politics/2023/may/15/what-are-labours-plans-for-giving-foreign-nationals-the-right-to-vote

Tbf though, I assume you’ve also acknowledge that no one would make policy decisions based on your own circumstances?

Your calculations look wrong

The national rate could be 0.54% for homes between £500,000 and £1 million, and 0.81% on any value above.

On property sold for £600k that would be approx. £800 + £500, on £1m it would be £800 + £2500 and on £1.5m it would be £800 + £2500 + £4000.

I don’t think they are unreasonable numbers as a replacement for both stamp duty and council tax.

The Guardian article provided by the OP explains that this is one of the proposals under consideration.

I do however share some of your skepticism around both Mr Leunig and the likelihood of this happening.

There is no longer enough value in the UK to support its current set up.
We all have to change our attitude or move to a country we believe to be better.

We have lived in enormous privilege for generations. It’s over. We’re not the first or last to experience this.

In summary ... it’s a possible replacement for council tax and stamp duty

Council tax as well?
I'd have thought that even less likely than it "replacing" stamp duty - after all if they need more tax income to waste I'm not sure how that'll be achieved by removing some?

Do you want us to pay more tax on our properties, income, wealth, IHT, air? to fund ever growing army of benefit claimants? and improve state services for all whilst our children are denied work practice in many public orgs? because we happen to be MC suckers?

What does this even mean? 😆

Oh, I regularly visit the state. Perhaps you are wondering if I have formed my own opinion of the place, @nearlylovemyusername ? Most definitely.

Primary education is highly problematic and secondary education is somewhat problematic since a funding constraint was put in place via referendum nearly 50 years ago. Other aspects of public life have also been affected. But there is still a lot to love.

This is a good idea. Tax has to comw from somewhere and this won't affect the lower and middle earners

How about taxing the heck out of empty and air bnb properties? Landlords pay it not residents. And also tax MPs freebies - did you have £10k worth of hospitality? Lovely that’s £2k in tax thank you xxx

The benefits bill IS soaring!!

It’s totally unfair. And that’s coming from someone who will likely inherit a reasonable amount from parents who are in 1m+ homes.

Why does tax always have to come from the high earners? Why do you think this is fair? How much to you expect the high earners to pay? When will you be satisfied? When compared with other European countries the high earners are more than pulling their weight. It’s the low earners who have to start paying more.

I live in the same post code as bishops avenue (where billionaires live) and in catchment of 5 outstanding state schools (primary/secondary) and my 2 bed flat is worth 400k..residents own the freehold. We have a lovely communal garden. This is in nw london too.

I have a baby too so am raising a family in the flat.

How? Assets must be depleted to pay expenses and councils are alert to fiddles.

London does prop up the rest of the country financially, that is a fact

But the stats arent that accurate. My OH comes into the category of that 27% tax take, but we do not live in London. His commute costs him over 7k a year and over 3 hours a day, often much more. He simply couldnt get a job elsewhere down here and the cost of commuting to the nearby towns where jobs are down here, was akin to the cost of commuting to London, travel is very expensive outside of London.

Low earners can't pay more

Yes tax employ properties and airB&Bs.

As for an MPs hospitality budget, this is a budget for expenses they incur in part of their job. I send Christmas hampers to people who have helped our company through the year and the company reimburses me. If an MP wanted to send some chocs around local charities etc, or getting posh biscuits in for his surgeries etcI can’t see an issue with that going on his expenses too.

to be fair the article doesn't really say much about the rationale for the changes and as plans still being developed is light on the details . . . I am not totally convinced what is proposed is the best machanism/solution, but what I do know is that our property taxes (council tax and stamp duty and also capital gains tax) need reform . . .

1. growth in property prices has far oustripped wages
2. concil tax as a concept is unfair (renters of top band homes who do not benefit from the wealth have to pay, there are cheaper rates for second homes, there are also 55,000 people who registered their holiday home as a business to avoid paying any Council Tax at all! - see see https://fairershare.org.uk/faq/#does-everyone-pay-council-tax
3. if you accept the concept of council tax - that you pay based on the value of the property you live in - the structure is unfair (expensive poperties and areas of the country with greater property wealth pay relatively less in Council Tax as a percentage of the property value, this unfairness has been exacerbated by a lack of revaluations since 1991 . . . . The effective tax rate on residential property is just 0.2% in London compared to 0.7% in the North East . . . . Making council tax proportional to value would see low and middle income households gain and high income households lose, on average (more info in https://ifs.org.uk/sites/default/files/output_url_files/Summary-Revaluation-and-reform-bringing-council-tax-in-England-into-the-21st-century.pdf)
4. as its paid by the buyer, stamp duty acts as a way to make home ownership even more unaffordable for the first time buyer (it also prevents mobility across the property market)

Now onto your point about property value not actually translating into wealth in the bank .. . i can see where you are coming from and this is why a tax on considerable wealth (i.e. those with assets of over £2m or something) may seem fairer/more attractive. However to be feasible to deliver and fair conceptually it needs to apply to the bulk of the UK's wealth - i.e. the property and the pensions of the middle classes (I agree with the comments here https://ifs.org.uk/articles/wealth-tax-would-be-poor-substitute-properly-taxing-sources-and-uses-wealth).

Also in terms of not having money in the bank to pay the tax, I think under the proposals described (and this aligns with the https://fairershare.org.uk/proportional-property-tax/), you pay when selling the property, when you realise your asset. My flat is worth more than £500k, so i'd be paying it then.