A cross-party think tank is urging Chancellor Rachel Reeves to impose higher taxes on property. 

The main changes it wants are: an annual property tax, potentially just on homes valued at £500,000 and above, to replace council tax and stamp duty; and a Mansion Tax in the form is an annual charge on properties valued above £2m, which could be a significant addition to council tax. 

Under Demos’s proposals, homeowners would pay a tax based on their property’s value, rather than the current system. Those buying properties over £500,000 would pay a percentage of the value on an annual basis, potentially including a higher rate on homes over £1 million. This would serve as a national property tax for properties over a certain threshold and might be combined with a local property tax to replace council tax. 

Demos believes this would help Reeves achieve extra revenue, potentially exceeding £3 billion, while also creating what it believes to be a fairer system by reducing the tax burden on salaried workers and addressing so-called tax advantages of high-value capital gains and inherited assets. 

Yesterday Reeves told the BBC that in November’s Budget she would not increase VAT (the tax is charged at 20% on most goods and services, with lower rates of 5% and 0% for some things). 

But she declined to repeat a promise she made to the Confederation of British Industry in November last year, that the government won’t be coming back with “more borrowing or more taxes” following the 2024 Budget. Instead she said the world has changed, and it’s important to “maintain commitments to economic stability”

In her keynote speech to the Labour Party conference she said: “In the months ahead, we will face further tests, with the choices to come made all the harder by harsh global headwinds, and the long-term damage done to our country, which is becoming ever clearer.”