Page 38 | Reeves' plan to tax houses over 500k

FridayFeelingmidweek · 2025-08-18T19:25:24+00:00

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 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.

Bambamhoohoo · 19/08/2025 14:22

Escapefrom1984 · 19/08/2025 14:08

I can’t see Keir Starmer introducing this.

His constituency must have one of the highest number of properties in the £500k+ bracket. Currently on rightmove the only properties less than £500k in Camden are 1 bed flats. All home-owning families in his constituency would be affected. So he’d be penalising a huge chunk of his electorate.
As Sir Humphrey would have said, that would be “brave”.

Edited

He’s Mp for Holborn and St Pancras, (so small a cynic might suggest that’s how he became MP) and the area includes a high degree of social housing. not sure why he’d be particularly invested in the rest of Camden more than anywhere else tbh.

Climbingrosexx · 19/08/2025 14:23

Bambamhoohoo · 19/08/2025 13:54

If this tax has been introduced sooner, we likely would’ve limited the property inflation that has led to this inequality.

my parents bought a house for £28k and sold it 31 years later for £475k.

cab you really justify that untaxed wealth/ income? They didn’t work hard, all they did was work the same as anyone else does, bought a house and paid off a mortgage. What’s so outstanding about that?

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Does that make them "wealthy" which is my point. Most people selling a house would have to buy another at today's prices and if elderly and have that sort of money would need to pay for their own care if needed or used towards retirement. My point and only point I have been trying to make is that a 500k house does not necessarily mean wealth and disposable income. Also I didn't at any point say it was outstanding

Bambamhoohoo · 19/08/2025 14:24

Primrose86 · 19/08/2025 14:18

They don't need to downsize if they can afford to pay the property tax. If they can't afford it then they should sell up.

There is a shortage of family sized homes on the market and why should the taxpayer subsidize the widow in a 5 bed house still demanding the government pay her the winter fuel allowance if she can't afford to pay her fair share in property tax. Her home has probably multiplied in value and the gains untaxed.

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this. No one is forcing you to sell the house, just pay the tax and stay.

there is a well work argument about pensioners who can’t afford council tax in their expensive houses and they don’t hold any weight either, it’s no different.

SpaceRaccoon · 19/08/2025 14:24

We pay tax on income, whether earned or unearned. Ye for some reason the money we make on our houses is not taxed. Im not sure I understand why. What is the argument for that if not just to keep house prices going up?

If you're selling a house, you need the money to buy another house. It's not like you'll have loads of lovely money in your pocket. Taking a big chunk of that money will mean it's not possible to then buy the next house.

In Spain and Portugal they only tax the amounts not used to buy the next property. And they only tax the profit, not the full whack. If you renovate, you can keep the receipts to offset.

Original poster

FridayFeelingmidweek · 19/08/2025 14:25

Older people should definitely be given incentives to downsize but not expected to. My in laws are the same, 4 bedrooms and I must admit it does upset me that they have all this empty space floating about and they are only hanging on to it because of not knowing what to do about tax/inheritance tax.

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soupyspoon · 19/08/2025 14:25

Escapefrom1984 · 19/08/2025 14:22

The whole “Ming vase” strategy of the Labour govt’s manifesto was based on the fact that all the focus groups showed that people in general do vote for their own self interest.

Otherwise there could have been an honest manifesto where they laid out their plans to improve public services through increases in taxation - on the taxes that raise large sums, namely income tax, VAT and employees’ NI. We - and the govt finances and public services - would be in a much better position if they had done that.

It’s lovely that you aren’t self-interested, but you are not the average voter.

As should be clear from this thread, with few exceptions, those affected don’t want this and those who are not affected do.

”Do it to Julia”. Over and over and over again.

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Actually I think you're right!!

I dont know what I was thinking to be fair.

The thread is enough of an example of this!

Bambamhoohoo · 19/08/2025 14:26

Climbingrosexx · 19/08/2025 14:23

Does that make them "wealthy" which is my point. Most people selling a house would have to buy another at today's prices and if elderly and have that sort of money would need to pay for their own care if needed or used towards retirement. My point and only point I have been trying to make is that a 500k house does not necessarily mean wealth and disposable income. Also I didn't at any point say it was outstanding

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I’m not sure the definition of wealth really matters, but yes it does-and they could’ve sold the house and paid 10% in tax and it would’ve made no difference to their long term lifestyles.

how can you justify saying someone who has made £450k unearned income can’t pay £45k of it to HMRC? Whether they’re wealthy or not, they’ve realised the cash, cash they didn’t earn. Why not tax it?

Bambamhoohoo · 19/08/2025 14:27

SpaceRaccoon · 19/08/2025 14:24

We pay tax on income, whether earned or unearned. Ye for some reason the money we make on our houses is not taxed. Im not sure I understand why. What is the argument for that if not just to keep house prices going up?

If you're selling a house, you need the money to buy another house. It's not like you'll have loads of lovely money in your pocket. Taking a big chunk of that money will mean it's not possible to then buy the next house.

In Spain and Portugal they only tax the amounts not used to buy the next property. And they only tax the profit, not the full whack. If you renovate, you can keep the receipts to offset.

If you believe in capitalism, the market will take care of this. Everyone simply has slightly less money to move on with- same principle as stamp duty.

DrPrunesqualer · 19/08/2025 14:27

soupyspoon · 19/08/2025 13:45

I wouldnt call that a loophole as such.

Its simple money management. You need to pay care home fees and the client has cash. So you use the cash. Why wouldnt you.

You would only sell the property if and when the cash dries up. Your asset is worth more sitting there than money in the bank (usually)

I wont be making payments for my parents for care home fees as I wouldnt be able to afford it. Once any cash dries up, the house would have to be sold and what is paid in IHT, is paid in IHT, if I lose it I lose it. Hope my sibling agrees! If not they can pay the monthly fees!

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You could rent your parents house to help with fees which might stretch your finances
Obviously this depends on rental income and cost of care.

FullOfLemons · 19/08/2025 14:30

DrPrunesqualer · 19/08/2025 13:34

Re your second paragraph re local tax
The article states the proposal is for two taxes
Local council and central Government ( added together for the yearly payout)
If we go by one amount as you say most people’s council tax will go down and the Govn will lose the stamp duty money too.

They want to increase money coming in not lose it.
The only increase on your suggestion would be taxing landlords on student lets which are currently exempt from council tax and of course single households.
of note I would see a disaster for students as rents would just rise

Perhaps as this is doing the rounds we might get more info soon on what’s being leaked

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Yes, there are two taxes proposed. I don’t think I suggested otherwise.

The first local tax is capped and the example of 0.44% would mean the amount raised would match council tax receipts.

We both got the calculations wrong on this as 0.44% of £500,000 is obviously £2,200. The £800 is a minimum.

The second national tax (0.54% and 0.81%) is designed to replace stamp duty.

As you noted the stamp duty receipts fall in the short term as it will only apply to new purchases, and as you say, this is not what the Government wants.

You can download the full report from the Onward website. This will explain it better than I can.

Original poster

FridayFeelingmidweek · 19/08/2025 14:31

I think so many people have pointed out that average workers (teachers, nhs workers) have 500k houses. If they are going to be treated as wealthy and this happens, I foresee a massive benefit jump and people reducing full time hours and doing UC top up because why on earth would anyone work in those thankless jobs where they have to do 50/60 hours a week to then not improve their life chances.

That's a guess of course if this happens.

However, like someone else said, I think they are leaking a lot of potential ideas via the press first to see what reactions are like.

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Bambamhoohoo · 19/08/2025 14:33

FridayFeelingmidweek · 19/08/2025 14:31

I think so many people have pointed out that average workers (teachers, nhs workers) have 500k houses. If they are going to be treated as wealthy and this happens, I foresee a massive benefit jump and people reducing full time hours and doing UC top up because why on earth would anyone work in those thankless jobs where they have to do 50/60 hours a week to then not improve their life chances.

That's a guess of course if this happens.

However, like someone else said, I think they are leaking a lot of potential ideas via the press first to see what reactions are like.

Edited

It’s proposed it would be due on sale- what would be the purpose of giving up working and going on benefits?!?

soupyspoon · 19/08/2025 14:33

SpaceRaccoon · 19/08/2025 14:24

We pay tax on income, whether earned or unearned. Ye for some reason the money we make on our houses is not taxed. Im not sure I understand why. What is the argument for that if not just to keep house prices going up?

If you're selling a house, you need the money to buy another house. It's not like you'll have loads of lovely money in your pocket. Taking a big chunk of that money will mean it's not possible to then buy the next house.

In Spain and Portugal they only tax the amounts not used to buy the next property. And they only tax the profit, not the full whack. If you renovate, you can keep the receipts to offset.

Well you have made my point for me, which is what is the point of not taxing that income, if not to keep house prices going up. You said it yourself, there is an unsaid acceptance that we mustnt tax that becuase the seller needs the money for the next (higher priced) property they're buying

Secondly, this would be on the profit wouldnt it, thats the point, wouldnt be any difference to the systems you mention.

soupyspoon · 19/08/2025 14:35

FridayFeelingmidweek · 19/08/2025 14:25

Older people should definitely be given incentives to downsize but not expected to. My in laws are the same, 4 bedrooms and I must admit it does upset me that they have all this empty space floating about and they are only hanging on to it because of not knowing what to do about tax/inheritance tax.

Are you sure they're only 'hanging on to it' for that reason?

They dont like living there? They're miserable living thre? It doesnt meet their needs?

I think most people continue to live in their homes because,,,, they are their homes and they enjoy living in that home. Even if it might need a few tweaks and adjustments as they age and migh tneed to find the pennies to pay for things as they're cash poor.

DrPrunesqualer · 19/08/2025 14:36

1457bloom · 19/08/2025 14:06

If it’s based on the sale value that would deter homeowners from improving their properties which is bad news for builders.

Extending your property though is unearned income. Doing it also reduces the number of smaller more affordable properties
I agree with the concept of cgtax at point of sale on those who have extended the m2

SpaceRaccoon · 19/08/2025 14:37

Extending your property though is unearned income. Doing it also reduces the number of smaller more affordable properties

How is it unearned income, given that you'll be spending tens or hundreds of thousands in doing so?

soupyspoon · 19/08/2025 14:37

DrPrunesqualer · 19/08/2025 14:27

You could rent your parents house to help with fees which might stretch your finances
Obviously this depends on rental income and cost of care.

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Yes good point, I think largely I wouldnt be inclined to do this, it would need a little bit of work to bring it up to rentable standards and to be fair I wouldnt have the inclination to be a landlord.

And of course I would then be an evil landlord! Actually I must might for the fun of being that evil.

Original poster

FridayFeelingmidweek · 19/08/2025 14:37

Bambamhoohoo · 19/08/2025 14:33

It’s proposed it would be due on sale- what would be the purpose of giving up working and going on benefits?!?

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I didn't say giving up work - I said going part time. What i mean is, if you can't afford to sell your home (most people I know work hard to get more money so they can afford a home with bigger/separate bedrooms, nice kitchen, a garden etc), and know the government has essentially trapped you, why carry on working so hard? So many public sector workers I know work so hard, especially nhs colleagues jumping through banding hoops to secure a better mortgage, if that option is made harder for them, why would they stay full time?

I'm not talking about all people, I can just see an attitude of 'why bother' being ignited.

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Chickenbone123 · 19/08/2025 14:38

It’s proposed it would be due on sale- what would be the purpose of giving up working and going on benefits?!?

I am really not getting this. So say I buy a house for 400k.

I pay a yearly council tax of 0.44% of the value. Based on what? 400k or some index linked rise or on what? What if someone dies an extension? What if a migrant hotel opens next door and it’s devalued?

I also pay a tax of it’s over 500k. Over 500k on purchase. On index link? On sale? And if it is 0.5 or whatever a year on sale. Does that apply to how many years? Again what if someone does an extension? The local school becomes outstanding?

What is going on?

Bambamhoohoo · 19/08/2025 14:41

FridayFeelingmidweek · 19/08/2025 14:37

I didn't say giving up work - I said going part time. What i mean is, if you can't afford to sell your home (most people I know work hard to get more money so they can afford a home with bigger/separate bedrooms, nice kitchen, a garden etc), and know the government has essentially trapped you, why carry on working so hard? So many public sector workers I know work so hard, especially nhs colleagues jumping through banding hoops to secure a better mortgage, if that option is made harder for them, why would they stay full time?

I'm not talking about all people, I can just see an attitude of 'why bother' being ignited.

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its times like this I am pretty agog at the lack of aspiration and laziness embedded in the British public. To suggest people would realistically not work or bother trying progress their careers so they can avoid paying a small portion of your unearned income when you move house?!?

stamp duty doesn’t make people give up hours and go on benefits so why would this?!

soupyspoon · 19/08/2025 14:41

SpaceRaccoon · 19/08/2025 14:37

Extending your property though is unearned income. Doing it also reduces the number of smaller more affordable properties

How is it unearned income, given that you'll be spending tens or hundreds of thousands in doing so?

I think the calculation would have to take into account the money spent on the extensions.

I dont really know how that would work though, using my parnts house, I think the house has increased by around 700k since they bought it. But they extended it substantially in the 80s. The cost of that extension then is peanuts compared to now, I dont know what they paid but it added 4 rooms.

So how would you calculate what it actually cost them and take that off the profit theyve made for the property?

Original poster

FridayFeelingmidweek · 19/08/2025 14:41

Nearing the 1000 post mark, meaning this debate will close.

Anyone on Twitter? Perhaps we could encourage Rachel or Keir to comment! Haha

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mintydoggyv · 19/08/2025 14:41

Comefromaway · 19/08/2025 14:13

Because

We need to collect taxes to provide for society whether that be the NHS, education, the disabled, etc etc
Because at the moment young people like my dd will never be able to afford to buy a property as prices have risen at a ridiculous rate. Something is needed to slow that rate down.

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Most of it is

Bambamhoohoo · 19/08/2025 14:42

soupyspoon · 19/08/2025 14:41

I think the calculation would have to take into account the money spent on the extensions.

I dont really know how that would work though, using my parnts house, I think the house has increased by around 700k since they bought it. But they extended it substantially in the 80s. The cost of that extension then is peanuts compared to now, I dont know what they paid but it added 4 rooms.

So how would you calculate what it actually cost them and take that off the profit theyve made for the property?

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There is already an established formula doing this for capital gains so could just use that

SpaceRaccoon · 19/08/2025 14:42

So how would you calculate what it actually cost them and take that off the profit theyve made for the property?

There would probably some inflation adjustment calculation that completely shafts the homeowner, at a guess.