Five possible changes to SDLT in Rachel Reeves' Budget

Rachel Reeves' first Autumn Budget on 26 November 2025 is expected to look closely at stamp duty land tax (SDLT). While nothing is confirmed, public commentary and policy papers suggest several possible directions for change.

1. Higher SDLT rates within current bands

One option is to increase the percentages in the existing SDLT bands. At present, the main-residence nil-rate band is £125,000. Higher rates would raise revenue but could further discourage households from moving.

Under current rates (main residence):

• £300,000 property: £5,000 stamp duty
• £700,000 property: £27,500 stamp duty
• £1.5 million property: £93,750 stamp duty

Any increase in these percentage rates would push these figures higher, particularly affecting those buying in high-value areas.

2. Replacing SDLT with a proportional property tax

Officials have been reported to be modelling a system where SDLT and possibly council tax are replaced by an annual property tax on homes above about £500,000. This would remove a large upfront charge but introduce an ongoing yearly levy linked to property value.

Such a change would represent a fundamental shift away from transaction taxes toward ongoing wealth-based charges, potentially improving housing market liquidity but raising questions about affordability for asset-rich, income-poor households.

3. A mansion tax on very high-value homes

Another option is a targeted "mansion tax", for example an annual charge (such as 1%) on the value of homes above £2 million, which various estimates suggest could raise several billion pounds a year.

This would be politically targeted at high-net-worth individuals and could be presented as a wealth tax focused on the very top of the property market, rather than hitting typical homebuyers.

4. Adjusting thresholds and first-time buyer relief

Instead of a full overhaul, the Budget could retune stamp duty banding and reliefs. Currently, first-time buyers pay 0% up to £300,000 and 5% on £300,001–£500,000, with no relief above £500,000.

Altering these thresholds would change who pays and how much, without redesigning the whole tax. For instance, lowering the nil-rate band back to £125,000 for all buyers would immediately raise revenue from middle-market transactions.

5. Higher surcharges for investors and overseas buyers

Finally, the government could further increase existing surcharges, currently 5 percentage points on additional properties and 2% for most non-resident buyers, focusing any extra tax on landlords, second-home owners and overseas purchasers.

This approach would be less contentious with voters who own just one home, while targeting property investors who some argue contribute to affordability problems in the housing market.

What happens next?

All of these remain possibilities only until the Budget is actually announced and detailed HMRC guidance is published. The 26 November statement will clarify which, if any, of these changes will come into force.