As autumn approaches, talk of sweeping tax reforms is generating uncertainty — and opportunity — in London’s property landscape. At Winkworth, we believe staying informed is crucial for both buyers and sellers aiming to navigate the evolving environment with confidence.
Here’s a round-up of seven major tax changes being rumoured ahead of this autumn’s Budget, and how they could impact London’s buyers, sellers, and landlords:
1. Replacing Stamp Duty with a New Property Tax
One of the most talked-about proposals is replacing the long-standing Stamp Duty Land Tax (SDLT) with a new, more proportional property tax. This could apply to homes over £500,000 and might shift the burden from buyers to sellers. Some suggest this could streamline transactions and reduce upfront costs, but others warn it could complicate valuations and slow market movement.
2. Capital Gains Tax on Primary Residences
Currently, gains on a primary home are sheltered from CGT under Private Residence Relief. Rumours indicate this might change, especially for properties over certain thresholds (£500,000 or £1.5 million), with CGT potentially hitting gains at rates up to 24% for higher-rate taxpayers.
3. Introduction of a Mansion Tax
High-value homes could face an additional levy. Whether through a standalone mansion tax or integrated into reforms targeting larger properties, this rumour has sparked concern among owners of London’s most valuable addresses.
4. Council Tax Reform
Council Tax bands are based on outdated property values, and there are calls to overhaul the system. Proposals include replacing it with a new, more equitable local property tax – potentially based on current property values and aimed at reducing disparities across boroughs.
5. Tightening Inheritance Tax and Gifting Rules
Inheritance Tax (IHT) changes may soon go beyond the existing 7-year gift exemption. Options under consideration include capping lifetime gifts or tightening the period during which gift exemptions apply—a move that could affect estate planning in high-value London homes.
6. National Insurance on Rental Income
Landlords may soon face National Insurance charges on rental profits—around 8%—adding to the cost of property ownership and affecting letting margins, particularly in already pressured prime markets.
7. Wealth Tax for the Ultra-Rich
Talk of a new wealth tax targeting the super-wealthy (e.g., those with net worth above £10 million) has gained traction. Though politically sensitive and potentially damaging for sentiment, it remains on the table in light of growing fiscal pressures.
What This Could Mean for London’s Market
- Buyer & Seller Behaviour: Rumours alone are already having an impact. Many potential buyers are adopting a “wait-and-see” stance, especially for properties over key thresholds.
- Prime London Vulnerability: London, with its concentration of high-value homes, would be disproportionately affected by taxes targeting luxury properties.
- Market Fluidity at Risk: Disincentives like CGT on primary homes or a new property tax could slow downsizing or relocation, resulting in reduced stock, particularly in desirable neighborhoods.
Winkworth’s Take
Tax speculation is already shaping market sentiment — and when the Budget arrives this autumn, clarity will be welcome. Whether you're planning to buy, sell, or invest, now more than ever it's vital to have trusted advice. At Winkworth, our local experts monitor these developments closely so you can make decisions with confidence.
Need advice tailored to your property goals and the shifting tax landscape?
Reach out to your local Winkworth office — we’re here to guide you through the complexities as autumn’s policy changes approach.
Source: PrimeResi
