With less than a week to go until the Autumn Budget, speculation about possible property tax changes is growing. Stamp duty reform, council tax restructuring and even a potential mansion tax have all been widely discussed and this uncertainty is already influencing how people feel about moving home.

What changes could be announced next week?

This year’s Autumn Budget will take place on Wednesday 26 November, slightly later than usual. In the months leading up to it, a number of possible reforms have been circulating, some of which could significantly affect the housing market.

Here are the key changes being talked about:

1. Stamp duty reform

There has been speculation that the government may replace traditional stamp duty with a proportional national property tax for homes valued above £500,000.

Under the current system, buyers pay stamp duty as a one-off charge when they purchase a property. The rumoured alternative would shift the responsibility to sellers, who would instead pay an annual tax.

Think-tank modelling referenced in the media suggests a possible rate of around 0.54% a year on the portion of a home’s value above £500,000, although the final figure would be determined by the government.

2. A possible mansion tax

Another rumoured proposal is the introduction of a “mansion tax” for homes worth more than £1.5 million.
Under this idea, sellers would lose private residence relief and instead pay capital gains tax on the increase in the property’s value, potentially 24% for higher-rate taxpayers and 18% for basic-rate taxpayers.

This would primarily affect London, where roughly 11% of homes for sale are above £1.5 million, compared with just 1.6% outside the capital.

3. Changes to council tax

Reports suggest the government could be considering replacing council tax with a new local property tax.
The idea being floated is a 0.44% annual charge on property values between £80,000 and £500,000, with a minimum annual bill of £800 and a cap of around £2,200 for properties worth £500,000.

A major shift here is that property owners, not occupants, would be responsible for paying the tax.

4. A new landlord tax on rental income

Currently, many landlords do not pay National Insurance on their rental income.
A potential reform could see all landlords paying 20% National Insurance on rental earnings, with an additional 8% charged on income above £50,270 a year.

How are people feeling about next week’s Budget?

• Nearly one in five (17%) have paused their moving plans until the Budget provides more clarity.
• 61% of respondents were aware of the property tax rumours.
• Of that group, 79% said they were concerned about what might be announced.

Those aged 55 and over were the most worried, unsurprising given that many of the rumoured reforms could disproportionately affect higher-value homes, which are more common in that age group.
 

What’s happening in the housing market right now?

Market data from the latest House Price Index suggests hesitancy at the upper end of the market.
Sales agreed on homes priced at £2 million and above are down 13% year-on-year, while homes between £500,000 and £2 million have seen an 8% fall in sales agreed.

This reflects the areas and price bands that stand to be most directly affected by the potential tax changes currently being debated.

A property expert summarised the current mood by noting that the rumours have clearly unsettled a portion of would-be movers, with some choosing to wait until the Budget before making any decisions. While most people are continuing with their plans as normal, the ongoing uncertainty about potentially costly changes is proving unhelpful.

Many simply want clarity so they can understand how any new policies might affect them.