Rachel Reeves previously advocated radical tax reform and is revisiting property tax changes as chancellor. Plans under consideration include replacing stamp duty with an annual levy based on home value and purchase timing, and extending capital gains tax to higher-value primary residences. Officials frame these options as part of a wider review of the UK property tax system. Experts say simplification could improve fairness and raise significant revenue. Historical proposals like a mansion tax have been debated but faced political opposition. The government is exploring multiple options to address a substantial fiscal shortfall.
Rachel Reeves is in favour of radical tax reform or at least she was in 2018. We need a radical overhaul of the tax system because our current system of wealth taxation isn't working, she argued in her pamphlet The Everyday Economy. Seven years later, in her second year as chancellor, Reeves appears to be returning to some of the themes in that pamphlet, especially as it relates to the UK's convoluted and unpopular system of taxing property.
The Guardian revealed on Monday the chancellor was considering scrapping stamp duty (used in England and Northern Ireland) and replacing it with an annual levy based on the value of someone's home and the time they bought it. On Tuesday, the Times reported that Reeves was also considering imposing the UK-wide capital gains tax on higher-value primary properties, even though the prime minister, Keir Starmer, ruled out doing so before the election.
Politicians have long looked at inflated property prices in parts of the UK and wondered how to squeeze more money from them. Vince Cable, the Liberal Democrat former business secretary, proposed a mansion tax in 2009 that would have taxed properties worth more than 1m at 0.5%. The plan was dropped when his party entered government and faced opposition from their Conservative coalition partners. The idea was taken up by the then Labour leader Ed Miliband, who claimed in the 2015 election campaign that the policy would raise 1.2bn a year.
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