It was revealed last week that the Treasury is considering introducing a new property tax on the sale of homes valued above £500,000, as part of a radical overhaul of stamp duty and council tax – prompting a range of reactions across the industry.
Treasury officials have been instructed to initially evaluate the feasibility of a national property tax replacing stamp duty on owner‑occupied homes. This exploratory work aims to model its potential impact ahead of the autumn fiscal event.
In a subsequent phase, officials will investigate whether a local property tax could eventually replace council tax, bolstering the funding of local authorities. However, no decisions have been made yet.
But before any final proposals are presented by the chancellor in the upcoming Autumn Budget, likely scheduled for late October or early November 2025, Eddie Goldsmith of You Convey has written an open letter to the government in regards the introduction of a possible national property tax. See below:
To Her Majesty’s Government
There is currently much speculation ahead of the Chancellor’s autumn statement over plans that the Government may have to change the tax regime within the residential property market and the possible introduction of a national property tax.
As a solicitor and conveyancing professional of over 40 years standing, I am writing to express my profound concerns regarding the introduction of a new National Property Tax and its potential impact on the United Kingdom property market. Whilst I understand the government’s need to explore new avenues for revenue generation, I firmly believe that such a tax, in isolation, would not only de-stabilise the property market but also likely lead to a significant reduction in tax receipts for the government.
The UK property market is a complex and sensitive ecosystem, heavily reliant on consumer confidence and a steady flow of transactions. The introduction of a broad-based National Property Tax, especially at a time of economic uncertainty, would act as a significant disincentive for both buyers and sellers.
There are currently four main taxes that affect the residential home buying and selling market.
Stamp Duty Land Tax (SDLT), Council Tax, Inheritance Tax and Capital Gains Tax
Taking these in turn, there are undoubtedly opportunities for reform or removal with SDLT representing a significant barrier to property purchases as it adds significantly to a buyer’s costs on purchase.
Whilst generating in excess of £14 billion per annum, there is considerable evidence from previous short term “holidays” that the “tax take” actually increases when the tax is mitigated as the volume of transactions increase and this, in addition, generates other tax income from ancillary and associated activity.
A review of SDLT is long overdue with various options having been forward such as:
Politically as well as fiscally, Council Tax is an interesting one controlling taxation from the national centre rather than locally elected councils has both its champions and its detractors.
It is however a significant annual cost to home owners and should, in my opinion, be looked at as part of a holistic approach to property taxation.
Inheritance Tax has already been changed since the arrival of the Labour Government with pension pots being include within the assets of an individual’s estate and reductions to family farm arrangements for farmers grabbing the headlines.
Capital Gains Tax (CGT) is currently only payable upon the disposal of assets beyond an individual’s main private residence(Private Residence Relief). There are now rumours circulatingthat the Government is considering bringing a person’s main residence into the calculation for CGT and that a significant sum of money would then become payable on disposal.
Whilst meeting the more extreme elements of an agenda to tax assets and redistribute wealth, it would be hugely damaging to the residential property market and be costly and difficult to implement with valuation criteria needing to be ascertained. Perhaps the biggest issue would simply be that people would choose not to sell at all.
Which brings me to the National Property Tax. I foresee the following immediate consequences:
While a National Property Tax might appear to offer a new stream of revenue, the resulting slowdown in transactions and the potential for a property market downturn would likely offset any anticipated gains from the new tax itself. The existing revenue streams, which are intrinsically linked to a fluid and active market, would suffer significantly.
I urge the Government to thoroughly consider these potential adverse effects and, in particular, introducing any new taxation without setting this against a review and changes across the range of property taxation already in place. I believe that alternative, less disruptive fiscal measures should be explored to meet revenue objectives, ensuring the continued stability and growth of the UK property market.
Both myself and my colleagues at You Convey and across the industry are ready to engage in constructive dialogue and offer our insights to help navigate this complex issue without compromising the vitality of a sector crucial to the nation’s economic well-being.
Yours faithfully
Eddie Goldsmith
Founder and CEO, You Convey
Read the orginal article: https://propertyindustryeye.com/you-conveys-eddie-goldsmith-pens-open-letter-to-governments-on-possible-property-tax-plans/
