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.

Incredible isnt it.

And in any case the benefit system should require full time hours unless you have kids under school age.

But isn't the second tax supposed to be on sellers, to replace stamp duty which is on buyers? So if I downsize from a house worth over £500k into a smaller property, I'm then stuck paying the tax for however many years on the value of my previous house that was over £500k? Why on earth would I choose to downsize?

Well like most of Labour’s proposals this one has gone down like a lead balloon…doesn’t seem to stop them though.

That's my point. Teachers and nurses are not lazy, they work harder than anyone I know and deal worh so much. If they can't improve their social standing, why not reduce hours to 3 days rather than 5 and do UC top up.

Or, if they don't agree with claiming unnecessary benefits a d can afford it, just reduce pay and hours to part time thus affecting our already understaffed public sector.

My point is, if there's no hope to improve your situation or you're taxed hugely, why bother.

Also, houses over 500k won't have necessarily made any profit or even lost value, meaning they certainly would be unfairly taxed.

Just thoughts and concerns.

But that's council tax. In plenty of European countries, for example, yes they have annual property taxes, but the "council tax" equivalent for local services etc is far smaller.

Say that again, it doesnt make sense

So you sell the 400k house you bought 10 years ago for over 500k. You pay what? All the years you have lived there at the final price x 0.5?

The uk does not have a property tax , council tax yes , no one in the treasury has heard anything about changes to differant taxes on homes at all , um

Existing CGT rules already provide for relief for "improvements" such as extensions, etc.

Someone not eligible for main residence relief, i.e. a buy to let landlord or second home owner, will already have to do a CGT when they sell, taking account of improvement costs etc.

@xSideshowAuntSallyXx
she won’t need to move. Her taxes won’t change as she’s already paid stamp duty
The change in your tax only happens if you move after a policy like this is brought in
So for those in more expensive properties the increased tax burden would make it unwise to move.

Hence the market for expensive properties will stagnate

It's Labour who are anti-aspiration! Work your arse off to do better and they clobber you with tax at every opportunity.

My in-laws live in a cul-de-sac in a village near excellent schools with 6 detached houses, between 5 and 7 bedrooms. Everyone is retired. Three couples lived there with their families who’ve since grown and the other three bought the huge houses as empty nesters.

Exactly. Also SE. Modest 3 bed terrace for around that price. Prices have fallen since we bought 5 years ago.

The politics of envy. Always has a big negative on aspirations. It’s foolhardy if you want growth.

As for council tax - it’s a banding. The value doesn’t matter at the top end. My DM had a 550 sq ft bungalow - band D. What would he band A? A garage? Driving down aspiration and people wanting a family home is detrimental to society. No family homes under £500,000 where I live so it’s a tax on families. A tax on the working younger people - and many already won’t be starting a family due to child care costs.

Labour needs to control expenditure not tax ordinary folk even more.

But we have an embedded culture of people who despite being highly educated and skilled would rather take from the public purse and curtail their career aspirations to avoid paying tax? it’s so weak and loser like.

But if you're in the property you paid stamp duty no?

If you're buying the property now and sell it 5 years, you pay stamp duty now and so not subject to the new tax in 5 years either

It would surely only apply to someone who sells now, doesnt pay the tax, buys after the scheme is brought in, pays no stamp duty and then pays the tax on resale.

Unfortunately we have an unfit for purpose tax/benefits system which actually encourages the "wrong" kind of behaviour, i.e. reduce working hours to pay less tax/nic but qualify for universal credit, or higher earners paying into pension or working fewer hours to avoid losing their free child care or family allowance etc.

A very common thing is for people with an asset on which capital gains tax is going to be due, i.e. shares in a business or a second home, etc., will plan to delay selling until a year in which they aren't working or earning a lot less than normal, so their CGT will be mostly at basic rate rather than higher rate - that's just one example.

I don't think the majority of people really understand the behavioural aspects caused by such a neurotic tax/benefits system.

People are "lazy" and lack aspiration because that's how the tax/benefits system has caused them to think and plan.

How about only taxing underused properties? So if you have 4 kids in a five bed property that is fine. But if you are a single couple or one pensioner you pay a deemed rent charge on the unused bit. Bit like the double council tax on the 2nd homes. So those who can afford it get to stay, but the rest are incentivised to move. And if you let your kids stay at home instead of paying rent, then you do not need to pay it. Win win?

Oh did I actually say that and did I justify it? I thought I said it does not necessarily mean they are wealthy with a lot of disposable income. (They might be i don't know them) I don't think I even mentioned tax but then my memory is rubbish these days.

As weak and loserish as those who could work but don't.
Taxing middle earners will only ever end up reducing aspiration.

So who should be taxed then?

I don’t disagree but from what’s being said here its caused them to think and plan at a low level, bitter and resentful level.

we have a progressive tax system, people aren’t being taxed on benefit they haven’t received. They will always be better off earning more (unless you consider your earnings to be what you claim from the public purse and offset it against your opportunity do nothing, of course)

can you imagine saying without shame that you’ve rather sit at home claiming benefits than use your skills to earn money? What a terrible example to set your children etc

So what’s the relevance to their wealth or otherwise then? We’re discussing paying tax on unearned property wealth.

But we have an embedded culture of people who despite being highly educated and skilled would rather take from the public purse and curtail their career aspirations to avoid paying tax? it’s so weak and loser like.

Ultimately we work to live. Why would you do more hours, away from your family, not getting the opportunity to do the things you love, just so you can hand most of the income from that straight back to HMRC? That's what seems loser-like to me.

That's exactly what high marginal tax rates (or loss of benefits rates) causes.

People make an informed choice about what working harder/longer is "worth" to them in other than monetary terms. If they'll "only" earn another £100 from an extra day's work (after taxes, travel costs, loss of benefits etc), then they may well think that a day of leisure to do other things is worth the "loss" of "only" £100.

And in fact, there are lots of instances, where working an extra day (or even an extra hour), or taking a promotion, etc. or getting a better job further away (or more difficult to get to) may actually make them worse off in monetary terms too!

It's all well and good telling people to think of the long term, etc., but if they can't afford to live in the short term, then they're in no position to look long term!

Personally, I think we need to start looking at things like income tax relief against wages for child card costs, commuting costs, etc as they do in some other countries, to help "make work pay" rather than constantly regarding workers as cash cows to pay for the non workers!