Rachel Reeves considering charging CGT on sale of main residence?

[Another76543]

It’s being reported today that Reeves’ latest idea is to tax homeowners on the capital gain made on the sale of their homes, where that home is above a certain value. From The Independent

“Rachel Reeves is considering hitting the owners of high-value properties with capital gains tax when they sell their homes as part of an attempt to fill a £40bn hole in the public purse.
The chancellor is said to be looking at ending the current exemption from capital gains tax for primary residences as she seeks ways to raise cash in the face of dire warnings about the state of the public finances - a move that would be seen as a "mansion tax".
Such a move would see higher-rate taxpayers pay 24 per cent of any gain in the value of their home, while basic rate taxpayers would be hit with an 18 per cent levy.

Sources told The Times that under proposals being considered for the autumn budget, the private residence relief would end for properties above a certain threshold.
The threshold is said to still be under consideration…….. “

@strawberrybubblegum ,

‘We pay far, far more than our fair share.’

On what basis do you make that statement? Fair is such a subjective word.

They pay for life though. So it’s not stamp. It’s a property tax

Hardly cost effective

I thought you just paid it when you sold the house?

I just looked it up. There’s two parts - a sellers one off tax to replace stamp duty, the other is a replacement for council tax. So again, not a new tax, but a replacement tax.

The idea being floated is you pay an amount every year
as a % of the sale price. We’ve seen figures of around 0.54%
Then you also pay council tax.

But there are various ideas in the papers

• and one of them is the % paid every year instead of a one off Stamp duty payment paid by the buyer.

• This thread is about another new idea of paying a lump sum cgtax on private residence. That’s the one you pay when you sell.

These are not being sited as either or but aswell as

So two seperate taxes

You don’t pay stamp duty when you sell. It’s when you buy! A selling tax or annual tax is new. Council tax is for local services not the government’s coffers!

It's weird, though, that we don't experience the profits from our homes as capital gains. They absolutely are - we even talk about buying property as an investment, don't we? During times of property inflation, we all sit around with our mortgaged pals comparing the £££ we've made just by having somewhere to live and a gigantic loan.

It's more rational to tax it as capital gains. The market would adjust, of course, because you can only sell anything at the price buyers will pay. Your up/down sizing plans will still be reasonable, just the amounts will be smaller.

Which yes could be a way forward when everyone has had the benefit of employer contribution pensions in their working lives
As it stands
That’s not the current case
Put that along side crashes in the markets and people losing all of their pensions many people rely on downsizing to free up enough to live on in their old sge

Some bought a rental to pay for their retirement but when mortgage interest could no longer be offset as a cost that no longer became affordable. So they had to sell up.

so for many people in their 50s plus downsizing and releasing money to live off in old age is the only way forward

If cgtax is introduced many will not be able to do that.
So at the moment many people will be plunged into pension poverty with this policy

Younger people with the benefit of employer contributions to pensions ( for some not much but more than nothing ) will be able to weather the storm and won’t be relying so heavily on downsizing. At the very least they’ll have the benefit of time to plan

I dont know how I feel about this.

On one hand capital gains makes sense. It is a capital gain.

But on the other hand, my property partly gained value because I put blood sweat and tears and money into renovating it. Would there be a way of calculating that and removing from the gain. It wasnt like a static lump that just sat there and increased in value. (Although some of the increase is just market forces)

I also think i helped improve the local schools as it happens. I volunteered, worked and sent my children to them, even when they were special measures and people were moving away. The schools aee now good and the area more popular

Would this tax make people less prepared to invest in upcoming areas as they would presumably pay more tax when they sell than if they bought in an area already good but making less gains. (Or would market force sort that out too)

Im interested in unintended consequences of things like this.

Would this tax make people less prepared to invest in upcoming areas

Hell, no. Like many up-and-coming young people of the 1980s, I made loadsamoney by buying sad London properties in 'gritty' areas with good transport links and improving them. Other people were doing the same, so the areas got gentrified/yuppified to meet the needs of people like us.

Not everyone wants to take that risk or do that work. The more cautious buyers with more money to spend bought from us - we had, collectively, turned the areas into places that would serve their needs immediately. We moved on to other sad properties, one or two stops along the line, and did it again.

This is the story with any investment. There are those who accept bigger risks for better potential returns, and those who can afford to accept less dramatic yields with slower, more reliable growth.

If you're interested, I pushed my luck in the end and went bust. I was over-extended, prices were stagnant and I couldn't weather it out because everything else in my life had gone wrong. Such is the danger of putting your all into a single, highly leveraged investment. I own nothing - and it's given me a strongly pragmatic overview.

My pension was embezzled (twice), as well. The more sensible thing is to invest across a range of vehicles, not just your home and not entrusting your future to a single management entity. You will find that the beautiful young people who bought our beautifully-renovated homes in our delightfully up-marketed areas (courtesy of their fathers, no doubt) also have a financial portfolio. Capital is capital, whether you live in it or not.

If I could advise my 24-year-old self, she wouldn't listen anyway! I'd be suggesting she buy an equally sad flat four stops further out of town, do the work, and wait. I'd say that, having a now much smaller mortgage to keep up (I was on 13.9% interest then, every thousand mattered), she should pay the difference into at least two separate managed funds ... and wait. Life would've been somewhat less exciting, but I'd have ended up well cushioned against reversals. And well placed to meet any taxes due.

This is just the first comparison chart I found. There would be better ones. Bear in mind you don't take out an enormous fucking loan to buy shares, you just pay in monthly and your investment quietly grows. Your payments are all investment, not interest.

I'm not a slave. I don't belong to the government, and the value I create with my ability and effort doesn't belong to the state. My personal possessions are mine - no one else is entitled to share.

The state spends a certain amount on public services each year, supposedly on behalf off us all, and to benefit us all. My fair share of the cost of those services is 1/62million of that over my lifetime.

I know you've said before that we benefit from the stability of the UK to make that money - but so does everyone else in the UK. That's part of what we're paying for with our 1/62million contribution. And partly it's the residual stability that our ancestors paid for with their contribution, which we've inherited. It certainly isn’t something we're 'buying' from the state.

Progressive taxation is charity. Not fairness.

Charity is fairly fundamental to a positive society we all want to live in. But personal responsibility and good-will are also fundamental.

When progressive taxation is excessive, and coupled with entitlement from those benefitting from the charity - and particularly when the tax is politically motivated, like education VAT - it's theft.

https://www.theguardian.com/commentisfree/2025/aug/21/baby-boomers-wealth-tax-property-pensions

“so for many people in their 50s plus downsizing and releasing money to live off in old age is the only way forward”

That is why I said there should be a parallel pension product people could pay some of the gain into up to a certain amount.
Again, we cannot sit here pretending that someone with a final salary pension scheme worth 3 million is the same as someone with a tiny state pension.
Somehow for everyone with some assets and some wealth and income, they have to start looking at the whole picture. They have mainly been coming for income so far and that discourages growth.

The tax on pension pots above the threshold is egregiously high.

Given that we need to encourage investment and housing is overinflated and damaging to society, especially in the London and the southeast, taxing housing (although not moving) makes sense.

In a way, the massive housing gains people (including me) have made are a windfall. There is nothing societally damaging about taxing housing more.

Of course it will create trade offs. But, for every older person who will lose, a young family will gain a decent house to live in.

And, of course, it should be indexed to inflation and allowances should be made for improvements.

The story I saw said the annual payment was INSTEAD of council tax, not as well as.

=

1. council tax as is atm ( they might change how it’s calculated though ). That money goes to your local council

plus

1. another for those who buy a property. Instead of paying a lump sum Stamp Duty you’ll pay a % of the value of your property ( 0.54% was a guess by one think tank ). You pay that 0.54% every year and the money goes to Central Government.

The later will only be on properties over a certain sale price ( as yet unknown.)

and both are paid annually together

If you’ve already bought and paid stamp you won’t have to pay but as soon as you move you will

But where are you getting that from? Because that definitely was not the case in the story I read.

Of course, all of this is speculation as none of us actually know!

It was in the news earlier this week.
many articles
Various threads on MNet aswell posted many links to news articles including one from a think tank that advised Sunak during Covid

It wasn’t in an article about cgtax on private residences
Thats a different matter again

https://www.independent.co.uk/news/uk/home-news/tax-rachel-reeves-labour-budget-b2811009.html

This doesn’t say anything about the replacement for stamp duty being an annual payment.

Like I said there’s louds of articles on it and
it’s been sited very clearly
I can’t say much more as I can’t be bothered to go back and find them all.

All the articles I’ve found say the same as the Independent 🤷🏼‍♀️

Oh well

CGT on main residential property will severely delay downsizing of those with houses over the threshold as CGT is at a much higher percentage for higher rate tax payers still working so incentive will be to wait til retirement when on a lower tax rate. Which means fewer family homes for sale and more people living in homes much bigger than they need.