Property-tax speculation has moved rapidly over the past week or two, with several earlier proposals now fading and a smaller number of measures emerging as the most credible candidates for Rachel Reeves’ first Autumn Budget. For investors, the direction of travel is now clearer than at any point since the first leaks began.
Just a week or two ago, the Government had been weighing a controversial plan to raise National Insurance by 2% while cutting income tax by the same amount — a move that would have had major implications for landlords and high earners. That package has since been abandoned, and attention has narrowed onto a set of property-focused tax changes that Treasury officials see as more politically survivable and capable of raising revenue without breaking Labour’s manifesto pledges.
Only one major national newspaper — The Telegraph — has obtained detailed modelling on these ideas, and although nothing is confirmed ahead of Wednesday’s announcement, the pattern that emerges is broadly consistent with recent Treasury briefings.
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Council tax surcharge on higher-value homes
The measure now most widely expected is a surcharge targeted at the most expensive properties in England. This would involve revaluing all homes in bands F, G and H — around 2.4 million properties — and then applying a new surcharge to the top 300,000 by value. Treasury projections suggest it could raise roughly £600m a year, with affected households facing increases of around £2,000.
For investors, the significance lies not in the additional annual cost but in the pricing ripple-effect. Analysts warn the surcharge could drag many ordinary London and South East homes into de facto “mansion tax” territory, increasing holding costs for rental stock in prime and near-prime areas.
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Annual property levy above £2m
A yearly charge on property valued above £2m (a form of mansion tax) is also under active consideration. Knight Frank estimates around 150,000 properties fall into this range. An owner of a £3m property could face a bill of around £10,000 a year.
For investors, the real concern here is behavioural distortion. A cliff edge of £2m creates incentives for sellers to price just below the line, compressing values near the limit and reducing liquidity.
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National Insurance for landlords
One of the more heavily signposted ideas is applying National Insurance to rental income at 20%, with an additional rate above £50,270. If implemented, this would mark the most significant tax rise on landlords since the Section 24 mortgage interest changes.
For investment planning, the implication is clear: leveraged portfolio landlords would face materially higher ongoing tax burdens, potentially accelerating the exit of smaller operators.
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SDLT changes: now less likely
Rumours around major Stamp Duty reform have recently cooled. A narrower adjustment at the top end remains a possibility, but current signals suggest the Chancellor may avoid anything that risks destabilising prime markets or triggering another round of cliff-edge distortions.
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CGT on main residences: low likelihood
Restricting Private Residence Relief for homes above £1.5m has been analysed, but it is now seen as one of the least likely measures. Treasury officials are reportedly concerned that taxing gains on primary homes would simply freeze transactions and reduce receipts rather than raising them.
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Inheritance tax reform remains a possibility
The residence nil-rate band, currently £175,000 per person when passing a main home to direct descendants, is still under review. Previous Treasury modelling shows that reducing or scrapping it could pull around 30,000 extra families into IHT annually and raise around £2bn.
What this means for investors
Two points are now clear. First, the direction of travel is explicitly towards wealth-based taxation rather than income taxes — a shift that investors need to price in. Second, the cluster of most likely measures targets high-value properties, landlords with strong rental income, and estates transferring high-value homes.
The final shape of the Budget will only be known on Wednesday, but until then, the field of realistic options has narrowed once again.
