Homes Under The Hammer

Homes Under The Hammer usually ends with someone making a tidy profit. Before long, that someone could be the Treasury.

But this isn’t daytime TV, surely one Loose Woman won't just auction off people’s futures.

Budget Rumours

There’s a rhythm to every Budget season. The leaks start, the headlines follow, and we all brace for impact. The loudest whisper this time? The possible end of Capital Gains Tax (CGT) exemption on main residences.

Newspapers and social media are already full of speculation about what taxes the Wicked Witch of Leeds West might unveil on 25 November. Of all the ideas flying around, none stirs emotion quite like taxing the roof over your head.

[Disclaimer: Rachel Reeves, MP for Leeds West and Pudsey – Chancellor, economist, not a witch. Emma Watson is here for her too!]

Safe As Houses

At present, when you sell your main home, there’s no CGT to pay, no matter how much it’s gone up in value. That relief – Private Residence Relief – is one of the biggest in the system, worth around £31 billion a year.

The rumour doing the rounds suggests that exemption could go. In theory, that means anyone selling their home might face a CGT bill on the profit, a prospect that’s caused understandable alarm.

An Englishman’s home is his castle, but what use is a castle without its main defence?

[Note: Maybe the only castles that are safe are those in Scotland...I’m constantly asked if you can buy one for next to nothing.]

In practice, it’s unlikely to be quite that blunt. Treasury officials are said to be exploring a tiered approach, or removing the relief only for properties above a certain value, figures between £1.5 million and £2 million have been mentioned.

Another idea being floated is Mansion Tax 2.0 – an annual levy on high-value homes – or a reform of council tax to reflect today’s property prices.

None of it is confirmed, but it’s more than enough to make homeowners twitchy.

Why this is unlikely to happen

First, the politics are dreadful. Taxing people out of long-owned homes isn’t the sort of headline any new Chancellor wants before Christmas. Reeves has worked hard to sound steady, not radical, and hitting homeowners, especially retirees on modest incomes, cuts straight against her “for working people” mantra.

Inheritance tax on pensions she might get away with, those changes only touch a small minority.

But CGT on main homes? That hits everyone. Politically, it’s toxic.

Second, the economics don’t add up. When Jeremy Hunt cut CGT on property from 28% to 24%, receipts actually rose because more people sold. Reverse that logic and you risk freezing the housing market.

We’ve already seen how sensitive property transactions are to tax. The Office for Budget Responsibility found that every 1% rise in stamp duty cuts sales by roughly 5–7%, depending on price band. At the top end, it's a 7% hit in activity for each 1% increase.

Taxing transactions kills transactions, and fewer sales mean fewer receipts. Treasury spreadsheets hate that sort of thing.

Third, the numbers only look good on paper. Take a £2 million home sold at a £750,000 gain. At 24%, that’s £180,000 of new tax revenue, until half of those owners decide not to sell. Add in lost stamp duty (it’s unlikely this would remain if CGT came in), and you end up collecting less tax overall while clogging up the entire housing chain.

And then there’s the practical side. HMRC already struggles to administer CGT on existing property disposals. Extending it to millions of main-home owners would be a bureaucratic nightmare. The UK’s property data is patchy enough without trying to track historic gains across every postcode.

It’s little wonder no developed country taxes main-home gains this way. Most offer full exemptions (like France and Germany) or deferral when buying another home (as in Sweden and Switzerland). The UK isn’t about to volunteer as the test case.

For all these reasons, this rumour feels less like a Budget plan and more like a Treasury stress test: float it early, measure the outrage, and quietly move on to something less incendiary.

A more realistic direction: reform, not revolution

If anything does emerge from this round of Budget brainstorming, it’s more likely to be a tidying-up exercise than a radical overhaul. Think new council tax bands for higher-value homes, or small tweaks to existing CGT and IHT reliefs. They’re quieter changes that generate less outrage and can be sold as “closing loopholes.”

There’s even talk of replacing both council tax and stamp duty with a proportional property tax – a single annual charge based on property value. It’s been proposed before and swiftly shelved, largely because it would create millions of losers and very few winners.

The yellow brick road to genuine property reform still looks a long one.

What Next?

For decades, home ownership has been the reward for working, saving, and staying put. Now it’s being recast as a taxable privilege.

For now, the sensible move is not to panic. Nothing has been announced, and even if something this bold ever made it past the Treasury whiteboard, it would take years to legislate.

Irregular inheritance tax changes are nothing new, and pensions seem to be “reviewed” almost annually, but CGT on your main home would be a genuine shock to the system. Despite the noise, the odds still look long.

The Budget is still nearly two months away, so for now I’ll keep my focus on the facts and revisit the real measures, not the rumours (see below for more detail), closer to the time.

A house once fell from the sky and ended a witch’s reign. Taxing main homes could do the same to this Chancellor.

Footnote: Other Rumours

Beyond the CGT chatter, other possible Budget measures include extending frozen income tax thresholds, tweaks to inheritance tax reliefs, and the usual tinkering with pension allowances. All are plausible, none are confirmed.

The current crop of Budget rumours

• Frozen thresholds – The freeze on the personal allowance (£12,570) and higher-rate threshold (£50,270) is likely to stretch beyond 2028. This “fiscal drag” quietly pushes more people into higher tax bands as wages rise.

• Inheritance tax (IHT) – Possible tightening of gifting rules, lifetime caps, or restricted reliefs such as Business Property Relief.

• Pensions – Talk of cutting the tax-free lump sum (currently 25% or £268,275), limiting higher-rate relief, and tightening salary-sacrifice arrangements. Familiar territory that’s highly unlikely.

• Property taxation – Aside from the CGT debate, ideas include new council tax bands for expensive homes, reform or replacement of Stamp Duty Land Tax (SDLT), and trimming reliefs for landlords - oh, and potentially National Insurance on rental income.

And the missing piece: no wealth tax

You’ll notice what’s not on the list, a direct wealth tax. Despite calls from campaign groups and Labour backbenchers, Rachel Reeves has ruled it out repeatedly, most recently in September.

The Treasury sees it as a political and practical nightmare, hard to enforce, easy to avoid, and likely to drive capital abroad.