Back to all Blog 03 September 2025

7 Big Tax Changes That Could Hit The Property Market This Autumn.

A flurry of treasury leaks & Speculation surfaced over the summer holidays, including proposals to end stampt duty, extend CGT & IHT, and to introduce a new annual property tax.

It felt like the government used the summer holidays to sound-out a smorgasbord of ideas for significant changes to the UK’s tax regime, including dramatic reforms to the property tax landscape – mostly targeting the prime resi sector. A series of “leaks” from the Treasury made media headlines throughout August, resulting in a torrent of speculation and uncertainty that’s likely to impact the property market until the Autumn Budget or beyond. Underlying all the proposals is an idealogical drive to make tax more “fair” – tapping the richest while easing the burden on “working people” and the less well-off. Whether the intention was to gauge public sentiment, or just to prepare us all for big tax hikes in October/November, the sheer volume of ideas apparently under consideration by the Chancellor is both heartening and worrying. On the one hand, we want to see fresh ideas that could improve a dated, unwieldy and often counter-productive system; on the other, it suggests desperation or at least belies the gravity of the much-referenced “black hole” in the national finances. A more measured line has emerged from Downing Street in recent days, as Reeves’ team apparently seeks to quell frenzied speculation. “None of this has come from us,” one unnamed Treasury source told The Times at the weekend. “It frustrates us intensely. These are not things we have been flying kites about or mooting.” Regardless of intent, one outcome of the rumour-milling has been to prepare markets and pundits for the worst. Everyone is now expecting big announcements and a heavier tax burden, which should minimise reactive turbulence if/when it comes to pass. After months of scaremongering, even a hard-hitting Budget could result in a “could’ve-been-worse” rally. But there’s also a strong risk of a fallow Autumn market as buyers and sellers take a wait-and-see approach. So are we in for a seismic shake-up of the property tax landscape before the end of the year? Possibly. While we wait for clarity, here’s a summary of the various reforms that have been thrown on the table in the last few weeks…

Replace Stamp Duty with a new property tax 

Perhaps the biggest of the unconfirmed proposals under consideration by the Chancellor is to ditch Stamp Duty altogether: Various un-named sources put it out there that the much-maligned transaction tax could be replaced with a new proportional levy on homes worth over £500,000. This new tax could be paid by sellers when a property changes hands, and collected by HMRC. Alternatively, it could be an annual levy, potentially payable when the property is sold. Debuting the rumour in mid-August, The Guardian suggested it would affect only around 20% of transactions, compared with 60% under today’s SDLT regime, while aiming to provide a steadier revenue stream for the Treasury. Second homes would remain subject to existing Stamp Duty charges. Most property industry pundits agree that Stamp Duty is overdue an overhaul, but any significant change is likely to be expensive, complicated, and politically challenging. 

Capital Gains on primary residences

Before last year’s General Election, there was talk of aligning Capital Gains Tax rates with Income Tax rates. That resurfaced over the summer, as did proposals to extend CGT to primary residences. At present, principal homes are exempt from CGT under Private Residence Relief. One option apparently under discussion is that residences sold for more than £500,000 (or maybe £1.5mn) would lose their CGT exemption, regardless of whether they are a main home, with sellers footing the bill. At current rates, this would mean higher-rate taxpayers handing over 24% of any uplift in the value of their property.

Mansion Tax

The same sources that spoke of CGT extensions also referenced a Mansion Tax, indicating homes worth more than £1.5mn could be hit with new or higher charges. It’s unclear whether this would come in the form of a new levy (unlikely), as part of the SDLT overhaul referenced above, or as an update to Capital Gains or Council Tax regimes. “The idea of imposing a so-called mansion tax is being discussed within the Treasury,” reported The Financial Times last month, amongst “various options on the table for raising revenue from more expensive houses”. The newspaper cited “people familiar with the discussions”.

Update Council Tax

Council Tax has been in the policy crosshairs for a very long time. The annual local levy is currently based on very outdated property valuations from 1991, and is widely seen as regressive – hitting smaller households harder than larger or more expensive residences. We learned in August that the government is playing with the idea of replacing Council Tax with a new version of a local property tax, paid by owners rather than residents. nfluential think tank Onward has pitched this idea for homes worth up to £500k, with bills starting at £800 per year. It would be collected by local councils, with Onward arguing it could “end the overfunding of various councils in affluent areas of inner London, particularly Westminster, Wandsworth and Kensington and Chelsea councils.”

Extend Inheritance Tax

We could see some “tweaks” to the Inheritance Tax net by the end of the year, extending the death tax’s reach to overseas assets and making it harder to “gift” wealth to the next generation before the Reaper’s summons. An end to the “seven year rule” (which allows tax-free gifting if the giver survives at least seven years beyond the gift date) or a cap on lifetime gifting have been floated. Officials are looking at “tightening rules on the gifting of money and assets”, revealed The Guardian, while The Telegraph reported that “parents may be prevented from making unlimited tax-free gifts to their children under a proposed tightening of inheritance tax rules.”

National Insurance on rental income

“Sources with knowledge of pre-budget preparations” told The Times last week that Chancellor Rachel Reeves is “considering” expanding the reach of National Insurance to include landlord’s income from rental properties. At present, National Insurance contributions are charged at 8% of income for employees, with exclusions for most earnings from property, pensions and savings. The rate drops to 2% for earnings above £50,000.

A Wealth Tax

The summer rumourmill kicked off in July, with news that the government was once again considering a “Wealth Tax” targeting the super-rich. A 2% levy on an individual’s net worth above £10mn was put forward by Labour Party grandee Lord Kinnock, with some claiming this would raise £11bn a year for the national coffers.