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…….. “

It’s their home so I don’t agree it should be taxed
Those who extend I believe should pay cgtax on the money made on that extension

Aswell as Second properties which of course currently are

If homes are subject to cgtax in the future then none of them should be exempt. It’s either accepted by the Government that it’s unearned income or it isn’t and how much a property increases in value should be irrelevant.

“It’s their home”

So? For some they put their life savings in an index fund. Gains are still taxed. They haven’t done anything to earn the massive increases in value.

An index fund isn’t a roof over your head
Im sure people have different views, that’s just fine

a £750k property in London is going to be pretty unremarkable though yes

Presumably she didn’t buy it yesterday and it’s £750k of borrowing, not the value of the house.

Why wouldn’t she have bought it recently?

Even if it was worth £1m that is feasibly a three bed semi somewhere quite ordinary in London.

This would push thousands into a form of negative equity. All those who have secured additional lending on their homes which has eaten into that “gain” would be unable to sell

That’s a good point actually. Anyone who has remortgaged could end up with minimal equity, if any, after CGT has been paid.

They’d need to be remortgaging something like 80% of the gain. If you do that, you’re not going to have much equity left, are you?

There are lots of people who remortgage when they get into financial difficulty. It’s the obvious thing to do. If you buy a house for £1m and it’s now worth £1.2m you can remortgage to release £200k before resorting to selling. Except now you can’t because you would have a c £50k CGT liability on disposal (I’ve used £1m just for ease of maths here)

Agreed

There will be people who have already done this. They have decided to use their equity to deal with their financial problems before this proposed change was even contemplated. Those people will be stuck and unable to move. I have a friend who would be in this exact position. She’s consistently spent more than her income and has remortgaged a number of times to release equity.

This thread is an insight into another world. Completely unrelatable to over half of the country.

65% of UK homes are owner occupied. It’s not a niche issue.

It also impacts disproportionately on those who haven’t moved recently. If youve lived in your house for thirty years you will in All likelihood have a fairly chunky gain if you sell next year. If you’ve moved multiple times and have only lived in this property for a year you have pocketed each gain as you’ve gone along and so you’ll escape the effect.

It is if it’s only houses sold for more than £1.5 million.

I’m alright guv..

Yes but what’s hard to understand that these gains come with 0 work. None. Even houses that are falling apart sell for a huge amount of money. If you stick your money in a fund and it gains a massive amount, you have to pay CGT. If your other assets become valuable, you pay CGT. The primary residence relief never took into account the huge house price increases we’ve seen. 677% in London in the last 50 years.

You don’t think it will be introduced and then be shifted down to include everyone? Or that the cliff edge will bugger up the fluidity of the market for the chains that dangle from the expensive houses? You think that you not owning a 1.5mil house means you are off the hook and there will be no affect on the wider market? Or that inflation will not drag more and more people in every year. I wonder what proportion of the children collecting their GCSE results tomorrow will live in a £1.5mil house when they reach 70. It’s hard to say but I’d bet diamonds it’s significantly more than today. Look at the drag from income tax thresholds - people moan but nobody really expects them to keep pace with inflation or wages.

But many people have spent lots of money improving their home so that it does rise in value. The increase isn’t always just the effect of increases in the housing market particularly when you take inflation into account. How is anyone going to remember the exact cost of their kitchen 20 years ago or the cost of the plants they have put in the garden etc. it’s fine if you bought an investment property which you always knew was subject to cgt since you’d have kept detailed records. This would crash the property market or at the very least cause it to stagnate. Decrease the number of family homes available, disincentivise people from spending money on improving their homes thus also impacting the building/electrical/plumbing /decorating/landscaping etc businesses, put many people into significant financial difficulties, etc etc. it isnt the solution.

Your new kitchen etc is not going to account for the 677% increase.

In any event the cost of capital improvements can be deducted from the gain.

I just find it baffling that people have seen HUGE increases in their house value and think they should get to retain all of that gain without doing much work at all?

I wonder what proportion of the children collecting their GCSE results tomorrow will live in a £1.5mil house when they reach 70.

When I collected my O level results the average house price was £3554. If you’d told anyone then that a house that wasn’t a stately home would ever cost £1.5 million they’d have laughed uproariously at you. I expect a lot of those kids will but inflation will probably mean they’re earning £250k for a basic job - always assumed that AI hasn’t eliminated them all.

I don’t live in London so my property hasn’t gained anywhere near that amount just through house price increases. My property has increased in value but I’ve lived here for 15 years and in that time have put in new kitchen new bathrooms new roof, new driveway, patio, windows, garden, solar panels, boiler and radiators, hardwood floors, full rewire. So yes it’s increased in value but only partly due to increases in the market and way more due to the work I’ve done on it (which I don’t have receipts for).

for me personally I just won’t downsize ever. I will give my kids as much of my cash as possible until I’ve run the pot right down and then the house will be dealt with under the IHT rules.

The entire issue is that wages aren’t keeping up with house prices.

Houses in 1975 averaged £11,300. The average salary was £2,900. House prices were around 3.9 times the average salary.

Now, in 2025, house prices average £280,000-£290,000. The average wage is only £34,000. That’s around 9 times the average salary. In London, it is much, much higher.

The housing market is on the brink of collapse, and part of it is because of people hoarding wealth in property.

Wages didn’t keep up with house prices then either. During 1971 to 1973 house prices doubled in two years. Women’s wages didn’t count towards a mortgage either. So the ratio was 4 x one wage, now two wages count so it’s 4.5. It’s really not so different.

Well, no. Because you used to be able to buy a house on a single income and now you can’t, unless you’re lucky or very well paid.