What you’ll learn
- The main property tax options currently being floated in the Autumn Budget.
- How each proposal could affect homeowners and small-scale landlords.
- Implications for the wider housing market – including prices, mortgages, and mobility.
- Insight from a landlord and homeowner perspective.
As the Autumn Budget approaches – scheduled for 26 November 2025 – Chancellor Rachel Reeves faces mounting pressure to plug a fiscal gap of perhaps £20 to £50 billion, all while honouring Labour’s pledge not to raise income tax, employee National Insurance, or VAT for working people – not something that is going to be easy.
To meet these intended goals and still plug the gap, attention has turned sharply to property taxes, with several bold and potentially game-changing possibilities under consideration.
Here are the rumoured options that are on the table and how they might affect you as a homeowner or landlord.
1. Replacing Stamp Duty with a National Property Tax
What’s on the table?
The Treasury is exploring a “proportional” national property tax to replace stamp duty on owner-occupied homes -possibly targeting homes over £500,000. It is reported that homeowners would only pay tax on the portion of their property that is worth more than £500K. For example, if you’re home is valued at £550,000, you would only pay tax on £50,000
Impact on homeowners & landlords:
- Homeowners: This could simplify the tax burden, with first time buyers and those with lower value assets unlikely to be hit. However, for homes in the South-East of England, even a modest property can be worth a lot ‘on paper’, without the owner necessarily being cash rich.
- Landlords: If limited to owner-occupiers, direct impact may be limited for now – but if this is applied to multiple properties, tax burdens could be large.
Market-wide effects:
- If structured fairly (e.g., more modest rates for lower-value homes), it may boost mobility and help first-time buyers.
- Removing the steep upfront cost of stamp duty could help stimulate the market.
- Properties could be deliberately devalued and create a ‘tax free’ market.
2. Replacing Council Tax with a Local Property Tax
Proposal details:
In the medium term, a local property tax could replace council tax, aligning each property’s annual tax contributions more closely with its current market value. Rather than the outdated council tax bands, which were set pretty poorly in the 1990s.
Potential effect on homeowners & landlords:
- Modernised fairness: More equitable distribution of costs based on property value.
- Cost increases: May hit homeowners in high-value areas significantly – especially retirees in family homes on pension incomes.
- Landlords: Could raise recurring costs, potentially passed on to tenants unless balanced by regulation.
Broader market implications:
- Local public services could be improved, by injecting much-needed funds into local authorities.
- This could in-turn improve house prices, as local amenities can be a factor.
- This requires considerable legislative change and might not be possible in this parliament – meaning it may never happen.
3. Charging National Insurance on Landlords’ Rental Income
Outline of proposal:
The government is considering applying National Insurance Contributions (NICs) to rental income – a move that could raise around £2-3 billion annually, but only if landlords don’t exit the market due to the changes – making this a tightrope to walk carefully.
Implications for landlords & tenants:
- Landlords: Directly hit, especially those with single properties or on high buy-to-let mortgage rates.
- Tenants: Higher costs may be passed through via rent increases. If this is substantial, it could cause a surge in unpaid rent or tenants ending their tenancies.
- Smaller landlords: Might face cash flow pressure, potentially reducing supply in the private rented sector.
Market effect:
This could squeeze smaller landlords out of the market, which might reduce the amount of private rental properties available. If it pushes landlords to sell, this could increase the supply of properties on the market and stagnate house prices.
4. Extending Capital Gains Tax to High-Value Main Residences
What’s being considered:
Currently, your primary residence is exempt from CGT. However, proposals aim to remove this exemption for properties valued over £1.5 million (this is the rumoured figure and may change).
Homeowner impacts:
- High-value home sellers may face hefty CGT charges, disincentivising sales.
- Those looking to downsize may rethink their plans – especially those moving from expensive properties.
- Market liquidity: Could reduce activity among the upper tiers, deepening regional disparities.
Overall effect on housing market:
- Sales slowdown: Particularly in London and home counties.
- Price divergence activity: Upper end sees sluggishness, while mid and lower-value markets may remain active.
5. Market Uncertainty and Behavioural Impacts
Research and expert commentary are already capturing the ripple effects:
- Zoopla reports that speculation around an annual property tax for homes above £500,000 and potential CGT on homes over £1.5 million is causing many buyers to “wait and see”.
- According to The Times, this uncertainty is paralysing the higher-end market. Sellers are delaying downsizing, and landlords are weighing exits.
- Financial Times experts warn that property taxes favouring owner-occupiers are just one part of a broader affordability versus fairness challenge. They advocate land value taxes and broader proportional levies.
The Grace Miller View
Policy design matters and a well-crafted property tax could enhance fairness and mobility; poorly calibrated, it may hinder markets and trap sellers.
Our clients, who are often smaller-scale landlords and property owners, especially those with one or a few rental properties or single-family homes, may be affected by these proposals, but this offers both challenges and opportunities
Here is some advice if you fall within these categories:
- Plan early: Consider longer term financial plans, gifting strategies, or sales if CGT thresholds or NIC on rental income is confirmed.
- Stay alert to your property’s value: Homes above £500,000 are especially in focus for property taxes and CGT.
- Seek advice: Professional guidance will be crucial to navigate allowances, exemptions, and phased rollouts.
If you would like more advice on managing your property, buying, selling or renting a home. Contact Grace Miller today for a free, no obligation chat.
