Rachel Reeves is facing a furious backlash after she was claimed to be plotting a radical shake-up of property taxes.
The Chancellor has been accused by property experts, such as TV’s Kirstie Allsopp, of seeking to ‘punish people’ for making sacrifices to buy their own homes.
She was also charged with planning a ‘wealth tax in all but name’ on middle-class homeowners through an overhaul of property levies.
Ms Reeves is said to have ordered Treasury officials to examine reforms to the current stamp duty system.
The Guardian reported that owners of houses worth more than £500,000 could have to pay a ‘proportional property tax’ based on the value of their properties when they sell up.
It said the plan would replace the current system of stamp duty, which is paid by buyers rather than sellers and is widely seen as hampering the property market.
However it is understood that Treasury officials studying potential changes to property taxes are not looking at this specific proposal.
Sources also denied claims that civil servants are drawing on the findings of a report published last year by think-tank Onward, which proposed dual national and local property taxes that would both be paid annually.
The newspaper claimed that over the longer term, a local property tax could also be introduced to replace council tax – with owners rather than residents paying levies based on the value of their homes.
Ms Reeves herself said of council tax in 2018: ‘We should also consider the case for its overhaul and replacement with a property tax, levied on property owners.’
But any shake-up of council tax would have to be agreed with Communities Secretary Angela Rayner
It comes as the Chancellor seeks to boost economic growth and plug a black hole in the public finances – estimated by economists to be £50billion – in her upcoming Budget.
The Guardian reported that ministers have told officials to model the impact of the new system and report back to them, with a national tax capable of being implemented by the end of the decade.
Elliot Keck, of the TaxPayers’ Alliance, warned: ‘If these reports are true then taxpayers are facing a wealth tax in all but name.
‘It is becoming abundantly clear that this avaricious Chancellor has an animosity for affluence which will cripple the country. Labour needs to dismiss these reports.’
Property experts also poured scorn on a possible replacement for stamp duty, claiming it could be a ‘disaster’ that would ‘erode buyer confidence’ and actually raise less money than the levy it replaces.
Kirstie Allsopp, the TV presenter who fronts Channel 4’s Location, Location, Location, warned the Chancellor not to ‘fly kites’ about potential new property taxes.
She told Times Radio: ‘Don’t fly kites like this. It is really destabilising for the property market.
‘And when I say the property market, I mean people’s homes. And their mortgages and homes affect their relationships, their jobs, their education, their wellbeing in almost every way you can think of. It’s not the place to fly kites.’
She also accused the Government of ‘punishing people’ for making sacrifices to buy their own homes.
‘It’s not Rachel’s to go after because it’s their homes,’ she added.
‘It’s the roof over their head. And this Government seems to want to punish people for making the sacrifices they’ve made to buy their own homes.’
Conservative leader Kemi Badenoch said: ‘Labour’s budget killed economic growth and has left Rachel Reeves facing a £50billion blackhole.
‘Her MPs won’t let her cut spending so now she’s inventing new taxes on your family home.
‘Only the Conservatives are committed to cutting the deficit, reducing spending and lower taxes.’
Sir Mel Stride, the Tory shadow chancellor, said: ‘The Conservatives have warned that more taxes are coming and now reports are emerging that the family home is next in the firing line.
‘This tax grab would punish families for aspiring to own their own home.
‘Under Labour nothing is safe. Your home, your job, your pension – the Chancellor has all of it in her sights.
‘Rachel Reeves will tax your future to pay for her failure.’
The Onward report, published in August last year, backed an overhaul of property taxes after finding that stamp duty ‘deters people from moving and leads to an inefficient allocation of housing’.
It added that replacing stamp duty with a national proportional property tax, levied on houses valued above £500,000, would ‘liberate houses in the £250,000-£500,000 market’.
The think tank also recommended replacing council tax with a local proportional property tax, levied on house values up to £500,000 with a minimum annual payment of £800.
It said the rate would be set by local authorities, with a rate of 0.44 per cent raising the same amount of revenue as existing council tax.
Tim Leunig, a former government adviser and the author of the Onward report, wrote: ‘These proposals would make it easier and cheaper to move house, for a better job, or to be near family, as well as being fairer.
‘It shouldn’t be the case that a terrace house in Burnley pays more than a mansion in Kensington.’
Responding to the claims that Ms Reeves is eyeing a radical shake-up of property levies, Stephen Perkins – of Norwich-based Yellow Brick Mortgages – said: ‘The property market was one area of the UK economy the Government hadn’t yet broken, so Labour is now working on plans to crash it.
‘Financially, unless the property tax is ridiculously high, this will raise less money than stamp duty, as fewer homes will be affected.
‘Initially, sellers will just build this into asking prices, sending prices up.’
Craig Fish, of London-based Lodestone Mortgages, said: ‘As usual Rachel is only thinking about how to earn a quick buck.
‘The long term consequences could be far worse. It’s likely that the major downside is it would stop people selling or moving, especially in high value areas, namely the south. The result is less income overall.’
Scott Gallacher, of Leicester-based Rowley Turton, said: ‘With the Government’s finances in a dire state, a new tax on property risks being little more than a reshuffle of the deckchairs — and could end up shooting ourselves in the foot if it dampens confidence further.’
And Michelle Lawson, of Fareham-based Lawson Financial, said: ‘Short-sighted tax grabs will be a disaster and will end up generating less rather than more.’
Government minister Torsten Bell this morning insisted Labour was ‘in the business of making fair tax choices’.
He told Times Radio: ‘We are in the business of making fair tax choices to make sure that we have sustainable public finances because we’re not going to repeat the mistakes of the Conservatives.
‘But also to make sure that public services aren’t collapsing because actually it’s bad for business.’
Asked about potential changes to stamp duty, Mr Bell told Sky News: ‘I’m a newish MP but I’m not an idiot.
‘Tax decisions are made by the Chancellor, I’m not going to start speculating on individual taxes. Taxes are matters for the Budget, they’re matters for the Chancellor.’
The Chancellor has come under increasing pressure from within Labour circles to introduce a form of ‘wealth tax’.
Lord Kinnock – who led Labour between 1983 and 1992 – last month claimed a two per cent levy on assets worth more than £10million would raise up to £11billion a year and be popular with a ‘great majority of the general public’.
Meanwhile, in a memo that was leaked to The Telegraph in May, Deputy Prime Minister Angela Rayner had also suggested to the Chancellor that she increase taxes.
This included reinstating the pensions lifetime allowance and a higher corporation tax level for banks.
It was recently reported that Ms Reeves is looking at a fresh inheritance tax raid as she grapples with a black hole in the public finances.
Treasury officials are said to be examining whether to tighten rules around the gifting of assets and money.
The Tories warned the plans revealed Labour’s ‘politics of envy’, and said people should not be punished for passing on their hard-earned money.
A Treasury spokeman said: ‘As set out in the plan for change, the best way to strengthen public finances is by growing the economy – which is our focus.
‘Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8billion and cut borrowing by £3.4billion.
‘We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s Budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.’
