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Rachel Reeves called to scrap stamp duty and overhaul council tax - IFS

Journalist: Katie Elliott, Daily Express

ended 14. October 2025

Rachel Reeves could raise “tens of billions” more in tax without breaking manifesto pledges by pursuing reforms of property and capital gains tax, the Institute for Fiscal Studies has said. 

It has also called for a council tax overhaul. The IFS said: 

“Property taxation is an area in desperate need of reform. Revenue-raising within the existing system is possible, for example by increasing council tax across the board or for high-band properties – though this extra revenue would accrue to local authorities, rather than the exchequer, in the first instance. It would be much better to raise any additional revenue from a reformed system.

"A good end goal would be a reformed council tax (or a new recurrent property tax) that was proportional to up-to-date property values in place of the current council tax (which in England is still ludicrously based on property values as of 1991) and stamp duty land tax on housing (which discourages relocation and upsizing/downsizing, and drags on growth).” 

Do you agree? 

10 responses from the Newspage community

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Omer Mehmet
Managing Director at Trinity Finance
The IFS is right — property taxation in the UK is stuck in the 1990s and long overdue for reform. Stamp duty punishes movement, council tax punishes fairness, and together they freeze the housing market. Scrapping stamp duty and linking council tax to real, modern property values would encourage people to move, downsize and upsize more freely. The housing market thrives on mobility, not stagnation, and right now the tax system does the exact opposite of what a healthy economy needs.
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Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
The IFS are living in cloud cookoo land if they think scrapping stamp duty, that riases over £20billion a year is a good idea. Council tax needs reforming, but if the IFS thinks this could plug the gap they are deluded. There's plenty of scope for progressive tax changes that would make those who aren't super rich better off whilst taxing those who can afford it at a higher rate. For example, raising the IHT threshold from £325,000 to £1million but then taxing it at 50% would be a fair use of tax reform. Or slashing corporation tax for those businesses with less than £1million profits, but increasing it for the gain making multi-nationals.
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Scott Gallacher
Director at Rowley Turton
Whilst Council Tax property values could obviously do with being updated I can't see the government wanting to open that particular can of worms. Firstly the the cost of such an exercise. And secondly, the papers would be full of sad stories of people who've extended their homes, especially those who've done so to accommodate adult children who can't afford to leave , suddenly facing a sharp hike in their council tax payments. And any other reform of the system risks becoming Rachel Reeves' 'poll tax' moment
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Eamonn Prendergast
Chartered Financial Adviser at Palantir Financial Planning Ltd
Council tax built on 1991 prices belongs in the history books. Reforming property tax is long overdue, but it must be done fairly and with foresight. Council tax based on 1991 values is indefensible, and stamp duty is one of the most damaging taxes for growth and mobility. Replacing both with a proportional, up-to-date property tax would create a simpler, more transparent system. However, any reform must avoid punishing homeowners who are asset-rich but income-poor particularly pensioners and families in areas where property values have surged. The goal should be to modernise, not to monetise.”
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Tony Redondo
Founder at Cosmos Currency Exchange
Council tax is genuinely outdated. Basing property taxes on 1991 valuations creates obvious distortions where a £200,000 home and a £2 million home in the same band pay identical tax - indefensible from an equity perspective. The system needs root-and-branch reform. Stamp duty creates real inefficiencies, penalizing people for moving, trapping workers in wrong locations, preventing elderly downsizing, and reducing labour market flexibility. Recurrent property taxes are more equitable than transaction taxes. A proportional property tax would be more progressive, with higher-value properties contributing more, while helping first-time buyers onto the housing ladder and aiding social cohesion. With a 174-seat Commons majority, the government could stomach short-term political pain for long-term systemic benefits. But are Starmer and Reeves bold enough to tackle it?
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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
The current system is outdated and regressive. Replacing stamp duty and the current council tax system with a progressive property tax based on up-to-date house values would be fairer and more efficient. It would stop penalising people for moving, make sure those with higher-value homes pay their fair share, and align property taxation with the real value of assets rather than 30-year-old valuations.

Questions remain, however, about how such a system would be implemented and maintained, including how to keep property valuations accurate and consistent without creating incentives for councils to inflate them to plug budget gaps.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
It'd be interesting to see a change to how property is taxed upon purchase. Stamp Duty can and does create a barrier for people moving given the large sunk cost to be considered. This is even more marked for higher value properties.

Any changes should be made with consideration though. If for example an annual "property tax" was introduced, then it would be very unfair to apply this to property owners that have already paid Stamp Duty on that property.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
Stamp duty in today's times is pure market vandalism that punishes mobility and strangles downsizing. It has created transaction costs so punitive that rational property moves have become financial masochism. Council tax reform sounds reasonable until you realise that an annual revaluation will become a systematic wealth confiscation exercise where artificial annual value inflation will generate easy political revenue without parliamentary votes. The current 1991 valuations, while obviously fossilised, provides at least predictable liability calculations rather than an annual lottery ticket dependent on local authority greed. Rachel Reeves will inevitably embrace the revenue raising elements while ignoring growth enhancing reforms, proving once again that Labour understands extraction better than creation.
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Luke James
Tax Director at Gravitate Accounting
The IFS is correct, property taxation is overdue for reform. Council tax is outdated and regressive while stamp duty discourages mobility and economic flexibility. Replacing both with a proportional, value-based property tax could improve fairness, unlock housing movement, and raise stable revenue.

Reform must be phased and carefully designed to protect asset-rich, income-poor households. Boosting council tax may help local authorities but will not solve national fiscal pressures without a broader strategy. Moving council tax to a fixed percentage of property values could double costs in London and the South and be unaffordable for many middle-income households.

A tapered or slab-based model similar to stamp duty with decreasing rates at higher bands could raise revenue while softening the impact on those most exposed. It is not perfect but may be the most politically and economically viable approach.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Property taxes are an area of the taxation system that is crying out for change. The current system of charging new buyers a tax (Stamp Duty Land Tax or SDLT for short) stifles the market; taxing the profit made on re-sale of a property sounds like a far more equitable system, but it would be a brave Chancellor who removes the Capital Gains Tax (CGT) exemption on peoples' primary homes. Council Tax is another area were we need strong and bold reforms, as comparing the cost of the same banded properties in different places shows some very expensive property, owned by people well over average UK earnings, paying less than people in much cheaper housing and earning far, far less - for example a Band B property in Westminster pays £791.14 per annum, whereas the same band property in Hull pays £1,697.52, yet the average house price in Westminster is £843,355 more than the average house price in Hull (HM Land Registry data July 2025).