A report Rachel Reeves is mulling proposals which would see sellers facing a new tax on houses worth over £500,000 has been dismissed. The Guardian newspaper reported officials are looking at a potential national property tax, which would replace stamp duty on owner-occupied homes.
It said the levy would be paid by owner-occupiers on houses worth more than £500,000 when they sell their home, with the amount due determined by the value of the property and a rate set by the Government. But a source said to be close to the Treasury has told the Telegraph: “That’s definitely not going to happen.”
Ms Reeves has reportedly ordered officials to review the country’s complex property taxes ahead of her second Budget in the autumn.
Under the existing framework, buyers pay stamp duty if they purchase property worth more than £125,000. But experts at the International Monetary Fund and Institute for Fiscal Studies have urged the Chancellor to scrap stamp duty, which they argue discourages people from moving.
Stamp duty and other property taxes are forecast to raise £15.7billion this year and rise to £26.5bn by the end of the 2020s. A total of £50bn is forecast to be raised from council tax this year, according to the Office for Budget Responsibility.
A recurring property tax and new council tax bands on the most expensive properties have been raised as prospective ways of ensuring the same level of tax revenue if stamp duty is scrapped.
Sir Mel Stride, Conservative shadow chancellor, said: “The Conservatives have warned that more taxes are coming and now reports are emerging that the family home is next in the firing line.
“This tax grab would punish families for aspiring to own their own home. Under Labour nothing is safe. Your home, your job, your pension – the Chancellor has all of it in her sights. Rachel Reeves will tax your future to pay for her failure.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, warned Budget speculation risks raising concerns among anyone thinking of selling.
She said: “Budget speculation season has kicked off, with a huge range of potential tax hikes and rule changes dragged into the debate. Today, a tax on the sale of properties worth over £500,000 is up for discussion.
“While it’s just speculation at the moment, separate reports suggest it won’t happen, and Pensions Minister Torsten Bell refused to be drawn on the subject. It will be raising concerns among anyone planning to sell.”
A Treasury spokesperson said: “As set out in the plan for change, the best way to strengthen public finances is by growing the economy – which is our focus.
“Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8 billion and cut borrowing by £3.4 billion.
“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”