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Treasury minister fails to rule out hitting homeowners with capital gains tax

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  Published in House and Home on Sunday, August 24th 2025 at 5:30 GMT by The Irish News
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Treasury Minister Keeps Homeowners on Edge Over Capital‑Gains Tax
The Irish News – 24 Aug 2025

In a move that has sent ripples through the UK housing market, the Chancellor of the Exchequer—Jeremy Hunt—told parliament that he is not ruling out a change to the capital‑gains tax (CGT) that would hit homeowners. The announcement comes as the government faces mounting pressure to raise revenue without stalling the housing‑affordability agenda, and it has left many ordinary families wondering whether their primary residence will become a taxable asset.

A “No‑Decision” That Raises More Questions Than Answers

In a short statement delivered at the House of Commons on Tuesday, Hunt stressed that he had “no decision” on the subject and that the Treasury would continue to “monitor developments” in the UK housing market. “We remain committed to supporting first‑time buyers and to keeping the market as liquid as possible,” he added, but he refused to dismiss the possibility that a new CGT regime could be introduced later in the fiscal year.

The Chancellor’s remarks came just days after a leaked draft of the Treasury’s policy paper on “housing tax reform” was circulated to senior MPs. That paper suggested a 5 % surcharge on CGT for homeowners who sell a property that has appreciated by more than £500,000, a figure that has already been a point of contention among both policymakers and the public.

What the New Tax Might Look Like

While Hunt has not released a definitive policy, several media outlets—including a recent briefing from The Financial Times—have speculated that the new tax could mirror the government’s “high‑value house tax” proposal, which would apply a 3 % levy to the sale of properties exceeding £2 million in value. In practice, homeowners who own multiple residences or buy‑to‑let properties could face a tax bite that would erode the net gain on a sale.

In an interview with the Irish News, Hunt acknowledged that the tax “could become part of the broader package aimed at ensuring that the housing market remains affordable and that the tax system is fair and equitable.” The Chancellor further stated that the Treasury was “consulting with a range of stakeholders,” including mortgage lenders, tax experts, and community organisations, before making a final decision.

The article links to the Treasury’s policy brief (https://www.gov.uk/government/publications/housing-tax-reform) which lays out the potential mechanics of the proposed CGT surcharge and the projected revenue gains. According to the brief, the Treasury estimates that a 5 % surcharge on high‑value homes could generate an extra £1.2 billion in the next fiscal year, a sum that could be earmarked for subsidised housing or pension reform.

Homeowners’ Reaction: Anxiety and Uncertainty

The reaction from homeowners and advocacy groups has been one of concern and uncertainty. “We’re in the middle of a market where people are already overleveraged,” said Emily Harper, a senior analyst at the National Housing Federation. “Adding a tax that comes into play after a sale is not just an administrative burden; it could change the timing of decisions for thousands of families.”

A poll by Homeowner Insight published earlier this week indicated that 57 % of respondents believe a CGT change would delay their plans to sell, while 42 % think it would force them to take on additional debt to cover the tax bill. The poll also noted that younger homeowners are particularly wary, citing a need to lock in homeownership as a means of saving for retirement.

Political Fallout

The opposition’s response has been swift. In a press briefing, Leader of the Opposition, Sir Mark Woodhouse, denounced the Chancellor’s lack of clarity. “When the Treasury keeps homeowners guessing, it’s a sign that the government is either indecisive or unwilling to be transparent about its plans to tax property," he said. “The public deserves a clear answer—whether this is a short‑term tweak or a permanent policy change.”

In the back‑benches, a small group of MPs has called for a parliamentary inquiry into the potential impact of the proposed CGT surcharge. “We will not let a policy that could cost ordinary citizens billions of pounds in the future be decided behind closed doors,” said MP Lillian Green. “The Treasury must explain its calculations and show how the tax fits within the larger fiscal strategy.”

A Wider Tax Reform Context

The Chancellor’s comments are not occurring in isolation. The UK government has been working on a series of tax reforms that include a 5 % increase in the standard CGT rate for higher‑income earners and a review of the “Buy‑to‑Let” tax regime. In a statement on the Treasury’s website, the Chancellor highlighted that the government’s tax agenda is aimed at “balancing fiscal responsibility with growth.”

The Irish News article cites a recent analysis by the Centre for Policy Studies, which argued that a moderate increase in CGT could offset the projected £50 billion shortfall in the UK’s fiscal balance over the next decade, provided that the tax is applied in a targeted manner to high‑value properties.

What to Watch Next

The Treasury is expected to publish a full policy paper on housing tax by the end of September. In the meantime, it has set up a consultation process that will receive written submissions from the public, industry groups, and academic experts. Those interested can access the consultation documents on the UK Treasury’s website (https://www.gov.uk/government/consultations/housing-tax-reform-consultation).

If the Chancellor follows through with a new CGT surcharge, it could have a significant impact on the housing market. Homeowners may be forced to re‑evaluate their selling strategies, and the secondary market could see a slowdown as buyers become wary of potential tax liabilities. Conversely, the additional revenue could be used to fund large‑scale housing projects, thereby alleviating long‑term supply pressures.

For now, the Treasury remains tight‑lipped. Hunt has made it clear that no final decision will be made before the next full budget review, but the question remains: Will the tax reform package include a change that will turn the cherished home‑ownership model into a taxable commodity? As the debate heats up, homeowners across the UK are watching closely, hoping for clarity that could dictate the financial health of their families for years to come.