Rachel Reeves is considering a tax on expensive homes to raise billions of pounds and close a large hole in the public finances. The chancellor has ruled out increases to income tax, VAT and national insurance while Treasury officials explore other revenue options. One proposal would remove the capital gains tax exemption on primary residences above 1.5million; sellers of those properties would face CGT at 18% for basic-rate and 24% for higher-rate taxpayers. The proposal aims to raise between 30bn and 40bn. Officials have also considered an annual levy on higher-value properties and replacing stamp duty with a national property tax payable on sale, with a possible longer-term move to a proportional council tax linked directly to property values. Buyers currently pay stamp duty on purchases over 125,000.
One proposal being considered would be to remove the longstanding capital gains tax exemption on primary residences above 1.5million, according to the Times. Homeowners selling properties above that level would be subject to a capital gains tax at 18% for basic-rate taxpayers and 24% for higher taxpayers. The proposals are set out to raise between 30bn and 40bn to stabilise the public finances while allowing Reeves to stick to her election pledge not to raise the three biggest taxes on income and consumption.
Reports have also suggested officials are considering wider changes to the way property wealth is taxed. Reports suggested an annual levy on higher-value properties had been considered. The suggestion from the thinktank Onward had urged the Treasury to impose an annual charge of 0.54% on the portion of a home's value above 500,000, rising to 0.81% on the portion above 1m, though officials stressed no decisions had been made.
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