Rachel Reeves Proposes New Property Tax: Will Stamp Duty be Scrapped?

At Mackenzie Smith, we’ve been watching recent property tax proposals with keen interest.

The Treasury is exploring a new property tax to replace Stamp Duty, aimed at addressing the long-standing “barrier-effect” on home movers. The proposal would shift the responsibility of paying the property tax away from buyers onto sellers of homes worth £500,000 and more. Eventually, a local property tax could also replace Council Tax, aiming to better fund local authorities

Stamp Duty Could be Scrapped

In the proposal, a national proportional property tax on owner-occupied homes over £500K would replace Stamp Duty. This measure would apply to around one in five property transactions—significantly fewer than the 60 % of sales that currently trigger Stamp Duty.

Why the switch? Stamp Duty is often blamed for blocking market movement, with buyers delaying or avoiding upgrading because of the added costs it creates. By making sellers responsible for the tax, the idea is that buyers can proceed with greater confidence and mobility.

What This Means for Homebuyers and Sellers

In theory, this means buyers won’t face the familiar Stamp Duty Tax. That lifts the initial cost barrier, especially for first-time buyers or those moving within the £500K-plus bracket. Instead, sellers may aim to pass the new tax onto buyers by raising their asking price. Particularly in markets where property values exceed £500K, it’s possible prices could edge higher to cover the tax liability. If sellers in high-value zones raise prices to offset the tax burden. There could also be a regional impact, with buyers moving away from more expensive areas like London, towards more affordable ones within commuting range

Analysis of Consequence is Key

This is no small tweak; it’s a structural shift that deserves careful consideration. If the tax rate is too steep, average home prices above £500K may inflate, as sellers adjust accordingly. This might mean that families looking to upsize could face more difficulties. There is a risk that marching ahead without a full impact analysis may create unintended bottlenecks for both buyers and sellers.

At Mackenzie Smith, we believe any tax reform must balance fairness with market fluidity. It should help—not hinder—people moving in and around North Hampshire and Surrey, where local dynamics matter just as much as national headlines. With a balanced policy, the right tax rate could stimulate the housing market—but get it wrong, and it could stall it.

Our view at Mackenzie Smith? We applaud reform that removes upfront barriers like Stamp Duty – but any changes need to be carefully considered. We’d like to see tax reform that balances fairness with market fluidity, helping people buying and selling in and around North Hampshire and Surrey, where local dynamics matter just as much as national headlines. With a balanced policy, the right tax rate could stimulate the housing market. We’ll be watching developments closely and assessing what this means for those buying or selling in our local areas.

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