The government may scrap stamp duty and introduce a capital gains-style tax on primary homes over £500,000, causing uncertainty for homeowners and investors. Experts warn the tax could create a price ceiling and slow housing market activity. Higher rate taxpayers would pay 24% on gains, while basic rate taxpayers would pay 18%.

Chancellor Rachel Reeves is under financial pressure and needs to show fiscal prudence. The UK government inherited a £22 billion fiscal “black hole” which has nearly doubled to £41 billion. Short-term policy decisions could slow the housing market and potentially bring in less revenue.

The new tax could create an artificial ceiling on asking prices, impacting all price points in the housing market. Homeowners and investors are advised to await the Autumn Budget speech in November. Misinformation and fear could lead to knee-jerk reactions, so it is important to seek advice from a regulated financial advisor.

Read more at Morningstar: How Will Government Tax Plans Affect the UK Housing Market?