There has been a steady stream of speculation in recent weeks about possible property-related tax changes the Chancellor may introduce. After all the rumoured proposals, it now appears that only a small number are still being seriously considered ahead of the Budget.
One of the main ideas gaining traction is a form of council tax surcharge on high-value homes, often compared to a ‘Mansion Tax’. Under this approach, around 2.4 million properties in bands F, G and H would be reassessed, and a further charge may be added for the top 300,000 most valuable homes.
Initial Treasury estimates suggest this could generate roughly £600 million each year. However, it may also mean that affected homeowners could see their annual bills rise by about £2,000. There are also concerns that this type of measure could impact families living in ordinary but high-priced homes, particularly across London and the South East.
Another proposal reportedly under active review is the introduction of National Insurance contributions for landlords. This would place a 20% charge on rental income, with a higher rate applied to income above £50,270. While this may raise revenue, critics warn it could push more landlords out of the rental market, further reducing supply.
A separate option being discussed is a yearly levy on the portion of a property’s value that exceeds £2 million. Around 150,000 homes are thought to fall into this price range. For example, the owner of a £3 million home might face an annual charge of around £10,000.
As for Stamp Duty Land Tax (SDLT), reports suggest that a wider overhaul is now seen as unlikely. The changes required would be too complex and time-consuming to deliver quickly. However, a small, targeted adjustment for the highest-value homes has not been ruled out completely.
Another idea that has surfaced is limiting Private Residence Relief for homes valued above £1.5 million. While this could raise additional funds, the Chancellor is said to be cautious because it might reduce market activity and ultimately fail to generate meaningful revenue.
The list of possible measures also includes changes to the residence nil-rate band for inherited property. This remains under review, and previous analysis indicates that reducing or removing the relief could bring around 30,000 extra families into inheritance tax each year. It may also raise up to £2 billion in additional revenue.
Industry figures have highlighted the delicate balance the Chancellor must strike. Speaking to The Neg, Nathan Emerson, Chief Executive of Propertymark, noted that the Government faces a difficult challenge in repairing the public finances while still supporting economic growth. He emphasised that any decisions should not undermine the stability of the property market, which remains a key pillar of the wider UK economy.
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