Treasury considers overhaul of stamp duty & council tax

The Treasury is considering a tax on the sale of any home worth over £500,000 as part of a “radical overhaul” of stamp duty and council tax, according to the Guardian. Chancellor Rachel Reeves is preparing for rises in taxes in the autumn budget, with senior ministers asking officials to study how a new “proportional” property tax could be implemented and model its impact.

Officials are considering a national property tax to replace stamp duty on owner-occupied homes, and are studying if a local property tax could replace council tax in the medium term, after the national tax. This is part of the plans to improve finances for local authorities.

A final decision has not been made but the proposed national tax from the Treasury could be implemented in this parliament. An overhaul of council tax however would take longer and may require a second term in office for the Labour government.

The policy options considered form part of the work from the Treasury to tap into the vast rise in house prices in recent years. Council tax is based on property values in the early 1990s.

If the plans are greenlit, the Guardian says, “they could provide valuable political cover for Reeves” in terms of both raising extra revenue without breaking Labour’s pledge not to raise   levies on working people, as well as policies that could appeal to the party’s MPs and members.

The chancellor has been under increasing pressure to consider wealth-based taxes, including from deputy prime minister, Angela Rayner. An additional tax on pricier homes could be sold as being a part of this.

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