Rachel Reeves' new 'property tax' torn to shreds - 'punishing hard-working Brits'

Rachel Reeves' potential property tax overhaul has been slammed by property expert Kirstie Allsopp, who warned it would "punish" hard-working Brits for purchasing a home. Labour faced fresh controversy yesterday following reports it was planning to scrap Stamp Duty and council tax in favour of radical reforms to raise cash.

Ms Reeves is reportedly considering introducing a proportional property tax for homes worth more than £500,000 and replacing council tax with a local property tax to repair bleak local authority finances, based on proposals by former Government adviser Tim Leunig. However, Ms Allsopp condemned the proposals, saying they would have disastrous effects on the British public.

She told Times Radio: "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."

She accused the Government of wanting to "punish people for making the sacrifices they've made to buy their own homes".

The proposals would see owner-occupiers pay proportional tax on houses worth more than £500,000 when they sell their home, reports The Guardian.

The Government would set rates on the amount paid based on the value of the property, and collect the proceeds via HM Revenue and Customs. Currently, only buyers have to pay 5% stamp duty when purchasing homes worth between £250,001 and £925,000.

The report also suggested the Government should consider replacing council tax with a 0.44% annual property tax on homes between £800 and £500,000.

Ms Allsopp added that "we keep on having these conversations" about inequality, which "does involve money that's in property".

She said: "The Tories did this just the same. They've used stamp duty over the years to get money out of the system. And as a result, you know, lots of other things have caused price inflation, but stamp duty is a big part of it. And people now don't move."

The Treasury said in a statement: "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... We are committed to keeping taxes for working people as low as possible."

Tax reform is expected to be at the centre of the Autumn Budget as Reeves attempts to fix a multi-billion-pound blackhole. But Mr Leunig told the FT that a plan would be tough to implement in the Autumn Budget, saying: "She needs money upfront, and she has fiscal rules to meet."