As the United Kingdom approaches its highly anticipated Autumn Budget set for November 26, 2025, Chancellor Rachel Reeves finds herself at the center of a mounting economic storm. With the Institute for Fiscal Studies (IFS) estimating a daunting £22 billion gap needed to stabilize public finances, speculation has reached fever pitch over which levers Reeves might pull to secure the nation’s fiscal footing. The stakes are high: business leaders, homeowners, landlords, and everyday consumers are all bracing for decisions that could reshape the country’s property and tax landscape for years to come.
Recent weeks have seen growing reluctance from 10 Downing Street to re-commit to Labour’s manifesto promise not to raise taxes on "working people," fueling uncertainty across the political and economic spectrum. According to The Independent, with the three largest sources of tax revenue—income tax, VAT, and national insurance—understood to be off the table, the Treasury is reportedly eyeing a series of smaller, targeted adjustments. These could include reforms to pensions, inheritance, and, most crucially, property taxes, which many experts argue offer billions in untapped revenue.
But as tax expert Dan Neidle recently cautioned MPs on the Treasury committee, piecemeal tweaks could further entrench the UK’s notoriously complex tax system. "Every time you create 10 more tiny tax rises and tax changes, you add to that layer which has ossified our tax system," Neidle warned. "I very much hope she does not do that." Instead, economists and policy analysts are calling for bold, structural reform—particularly in the realm of property taxation.
Among the most talked-about options is a so-called "mansion tax," which would impose a 1% annual charge on residential properties valued above £2 million. Alternatively, Reeves could remove the capital gains tax (CGT) exemption on main residences worth more than £1.5 million. Under current rules, homeowners selling their primary residence are exempt from CGT, but this could change for the wealthiest homeowners. For example, a homeowner selling a £5 million property bought for £4 million could face a £240,000 CGT bill—24% of the £1 million gain, as explained by The Independent.
Hannah Aldridge, senior research and policy analyst at the Resolution Foundation, notes, "The effectiveness of any of these proposals very much depends on the thresholds the Treasury decides to set. My instinct is it won’t generate the level of revenue that some changes to the income tax system could generate." She adds that property wealth remains "an incredibly undertaxed area of the economy," making reform both viable and necessary.
Some, like columnist Sean O’Grady, point out the historical imbalance: "The handsome tax breaks historically given to investment in residential property have made many people rich but have also encouraged house price booms, made a home unaffordable for many, and discouraged more ‘productive’ investment in business, which has few such fiscal advantages." O’Grady also highlights the political risk: any move to levy high-value homes risks reigniting accusations of a "tax on the middle class," particularly in London and the South East where property prices are detached from average incomes.
Another major area under scrutiny is council tax, which is based on outdated 1991 property valuations. The IFS and other think tanks argue that council tax should be replaced with a levy proportional to up-to-date property values. The Treasury is reportedly considering proposals from the center-right think tank Onward, which suggest replacing council tax with a "local property tax" paid by owners, based on current sale values and capped at £500,000 to prevent the wealthiest areas from gaming the system.
Such reforms could see around 2.4 million properties in England’s top tax bands revalued, with the 310,000 most expensive homes (those worth more than £1.5 million) facing higher bills. According to The Times, this could raise about £600 million a year, adding roughly £2,000 to the annual bill for owners of high-value homes. However, as Aldridge points out, "To reform council tax properly, you need to do a revaluation exercise. But speculation suggests only the top bands may be revalued to identify the most expensive properties and apply a surcharge."
Not everyone is convinced this goes far enough. In a recent letter to Reeves, more than a dozen Labour MPs—mostly from northern constituencies—urged her to scrap council tax altogether, calling it "unfair" and "outdated." They argued, "The result is a system that punishes communities like ours in the nations and regions outside London and the south-east." Still, O’Grady notes that even a partial reform could leave "substantial geographic disparities in place." He suggests a refinement could be to allow owners to defer payment of the notional tax bill until they move, sell, or die, merging it with inheritance tax.
Another reform on the table is the replacement of stamp duty, a tax paid by buyers based on the property’s price. The IFS’s Helen Miller has called stamp duty "awful," arguing that it discourages mobility and gums up the housing market. The Treasury is reportedly considering a "national property tax" on sales of homes worth more than £500,000, paid by the new owner only on the portion above that threshold. At a proposed rate of 0.54%, with a 0.278% supplement for homes above £1 million, this would raise similar revenue to current stamp duty but affect fewer properties. An alternative would shift the burden from buyer to seller, making it easier for first-time buyers but potentially angering older, wealthier homeowners.
In the rental sector, Reeves is reportedly considering a new "landlord tax" by applying National Insurance (NI) contributions to rental income, which currently escapes NI as it is not classed as "earned income." This could raise around £2 billion and would target a new revenue stream without breaching Labour’s pledge not to raise taxes on "working people." Yet, as O’Grady observes, "Everyone hates landlords, it seems, but these changes to their incomes coupled with more costly and onerous obligations under the new Renters Rights Act will inevitably lead to a contraction in the market." He warns that such a move could reduce supply, drive up rents, and ultimately harm renters—a political risk for Reeves even if the economic rationale is sound.
All of these proposals come against a backdrop of deteriorating economic indicators. As reported by Reuters, the S&P Global Purchasing Managers’ Index for November showed companies pausing plans amid fears of further tax hikes, with private-sector employment falling at the fastest rate in four months. Official data from the Office for National Statistics revealed that consumers shopped less in October—the first drop in retail sales since May—and government borrowing from April to October was the highest on record outside the pandemic era.
Consumer confidence is also waning. The GfK barometer dropped to -19 in November, with Neil Bellamy, consumer insights director at GfK, calling it "a bleak set of results as we head towards next week’s budget." With the government’s budget watchdog expected to downgrade growth forecasts and borrowing costs on the rise, Reeves faces the unenviable task of raising £20–30 billion more—without derailing already fragile economic growth or further upsetting an electorate weary of broken promises and rising costs.
As the clock ticks down to November 26, all eyes are on Reeves and her team. Whether she opts for incremental tweaks or bold structural reforms, the choices made in this budget will reverberate through Britain’s homes, businesses, and communities for years to come.
