Conservatives urge government to rule out property tax rises

The Conservative motion noted recent reports that the government is considering a range of increases to taxes on property and called on the government “not to introduce an annual property levy… higher rates of council tax, or a land value tax, or to lower the thresholds or further increase liability to inheritance tax, for example, by changing the seven-year gift rule”.

The motion was defeated (97 for, 331 against), but both Conservatives and Liberal Democrats cautioned the government during the debate about the potential impacts of these proposed changes. Government ministers said they would not comment on Budget speculation.

Proposing the motion

Opening the debate, Shadow Chancellor Sir Mel Stride accused the government of not having the “will or the plan” to deal with spending, saying “that is at the heart of the reason why we will all be punished and pay the price of more taxes come the Budget in November”.

On the rumours of changes to private residence relief for capital gains tax (CGT), he suggested that this would penalise people for selling and moving home and discourage downsizing. He suggested an annual tax on homes would be “a tax on aspiration”, asking the minister to rule out the rumour and “put people’s minds at rest”.

The shadow minister also criticised the government’s consideration of changes to the gifting regime in inheritance tax (IHT), warning that the inheritance tax yield will double over this Parliament. He said: “They [Labour] are not content just to pulverise farmers and family businesses, and to see those businesses and farms broken up when they are passed on from one generation to another, because of the imposition of tax”.

Stride suggested that approximately 15,000 high net worth individuals have left the country during the period in which the Labour government has been in power. He stated: “A consequence of that tax just walking out of the door is that we will require somewhere around a third of a million to half a million people on average earnings to make up the difference”.

Conservative MPs, including Harriet Cross and Andrew Murrison, made interventions in supported of the shadow minister's comments, with the latter suggesting that if the government were to impose CGT on a person’s principal private residence, they should at least consider whether there should be indexation allowance “to provide some relief from the horror that I fear is about to be inflicted on my constituents”.

Tim Farron (Lib Dem) and Jonathan Brash (Lab) intervened on Stride to make points related to council tax. Farron supported the last government’s decision to allow councils to double council tax on second homes, while Brash asked why the Conservatives opposed abolishing “the punitive council tax system, which taxes poverty and deprivation in this country”. In response to Brash, the shadow minister responded that council tax and revaluations are things that the government should look at, “because we do not want them to be entirely static; there can always be reform and change”.

Speeches from other opposition parties

Daisy Cooper, Liberal Democrats Treasury spokesperson, argued that council tax is ‘regressive’, stamp duty slows growth, and business rates “are a tax on bricks and mortar that bear no relationship whatever to the amount of money a business might make”. She urged Labour to consider these issues —warning, however, that “[g]oing after property simply as a Treasury tax grab will be a disaster if the government do not set out a broader vision for property taxation and for housing as a whole”.

Cooper agreed with parts of the Conservatives’ motion, including the call to rule out CGT on primary residences and an ‘annual’ property levy. However, she added that Lib Dems are open in principle to the idea of a land value tax. She believed that land value taxes can create more fairness in the system and produce a more efficient use of land (depending on the design of any land value tax and any exemptions that might be introduced). “If government bring forward any such proposals, we will scrutinise them closely”, she said.

The Lib Dem MP also criticised the Conservative motion for failing to address the need to replace the ‘broken’ business rates system and for omitting calls to give local authorities greater power to regulate short-term lets, especially in the south-west and Cumbria.

For Plaid Cymru, Ann Davies called on the government to reverse its planned changes to IHT agricultural and business property reliefs. She challenged that the government’s claim that the policy would affect only about 500 estates a year, saying it would punish working farmers while not hitting “tax-avoiding wealthy land hoarders”.

Other Conservative speakers

Conservative MPs attacked the government for tax rises already introduced and those that may be yet to come.

Peter Fortune, who represents Bromley and Biggin Hill, said that scrapping private residence relief “would be irresponsible and economically ruinous. Imagine if somebody bought a house in Bromley in 2010 for £350,000. Today, it would cost somewhere in the region of £550,000. If they wanted to move to a new area for work or to be closer to family, without that relief, the tax bill would be somewhere in the region of £50,000. That eye-watering bill would stop people moving and wreck the housing market.”

Gregory Stafford said the Treasury had been “flying more kites than we saw at the end of Mary Poppins… but if they are genuine, the Chancellor is preparing the most destructive raid on homeowners in living memory.” The taxes being rumoured would add up not to reform, but to “a sledgehammer aimed squarely at aspiration, mobility and stability”. In particular, putting CGT on main homes would “trap people in their properties, create a locked-in market, and dry up the supply of homes”.

Sir Ashley Fox claimed that “[t]he fundamental reason that this government need to raise taxes is that they are incapable of controlling the fiscal incompetence of their own back benchers.”

Jerome Mayhew said that “[t]he kids in Downing Street… think it is clever to fly kites about tax rises” but such stories – on top of actual tax rises – had led to a collapse in business and consumer confidence. “People are losing their jobs because of the government’s kite flying,” he asserted.

Robbie Moore accused Labour of “coming after people’s property” and businesses too. “Through the changes to inheritance tax relief, agricultural property relief and business property relief, the government have destroyed one of the sole business environments that our communities and businesses rely on—the ability to pass an asset on to the next generation and for them to earn an income from it.” He claimed that this had led to businesses in his constituency actively taking the decision to slow the amount of investment they are willing to put in to grow their own businesses. He also called on the government to “get a grip” on the Valuation Office Agency, which he said was not providing businesses with their business rate liabilities.

Winding up the debate, Sir James Cleverley, the Shadow Housing Secretary, said that, in government, the Conservatives had “put up taxes more than we would have wanted. However, I do not remember Labour Members criticising our expenditure when we were supporting businesses and individuals through furlough; I do not remember them criticising our decisions to support people with their fuel bills in response to Russia’s brutal invasion of Ukraine.” He concluded: “the mask has slipped—they want to put up taxes. They love putting up taxes and they are going to put up taxes.”

Labour backbenchers

Labour MPs attacked the Conservative record and defended the current government’s tax increases as the fairest available to fund essential investment.

Emily Darlington said that, under the last government, despite 27 tax rises, government debt rose from 60% of GDP to 100.5%, while Mark Ferguson accused the Conservatives of creating ‘straw men’ but not setting out any actual plans for the country.

Chris Vince said that, under the Conservatives “thousands of His Majesty’s Revenue and Customs compliance officers, including my mum, were made redundant and we were not able to collect the right amount of tax that people owed.” He wondered: “Is that partly why this government inherited such a large financial black hole?”

Louise Sandher-Jones stated that “we have heard that if we only lowered taxes, we would enter a glorious period of growth and even better public services”, but, she continued, the impact of that theory over the last 14 years had been austerity and cuts in investment, leaving Britain “at the mercy of global shocks that we were less well prepared and less well placed to withstand”.

Laurence Turner focused on the inheritance left by the previous Conservative government, saying the additional costs the government were now having to fund, such as for public sector wages, were always coming.

Luke Murphy said the Office for Budget responsibility had been warning since 2011 about an “unsustainable” fiscal trajectory in the public finances. The Labour government had, he said, made “difficult but fair decisions on taxation—decisions that ensure that the richest and larger businesses pay more—because we urgently need to invest in the public services that the Conservatives ran into the ground.”

Economist Jeevun Sandher, a member of the Treasury Committee, said the Conservatives were “the party that dashed the dream of home ownership for my generation”. Labour’s tax rises follow three principles, he argued: “they are progressive, raising more from those on higher incomes than from those on middle and low incomes… they are growth enhancing, both in the way that they are applied and in the investment they pay for… [and] we can implement them easily.”

Amanda Martin acknowledged that some of the decisions on tax been difficult, but they had been necessary, citing changes such as “placing the burden of tax on the very wealthiest, with private jet tax up 50%, stamp duty on second homes, changes to inheritance tax on big landowners, the scrapping of non-dom status, the ending of offshore trusts to stop inheritance tax avoidance, and VAT on private schools.”

Melanie Ward said that politics is about choice, “and the difference between this Labour government and the opposition is that we have chosen to invest in our communities, in our public services and in increasing economic activity and wages, after they failed to do so under five Prime Ministers and seven Chancellors.”

Government response

The new Chief Secretary to the Treasury, James Murray, said the government would not respond to speculation in advance of the Budget. He emphasised that economic growth is critical to the government's plan and due to “the right decisions that we have taken we are starting to move in the right direction.” He continued that the Budget that the Chancellor will deliver in November “will be carefully considered and designed to get the balance right between making working people better off and raising enough money to fund our public services and getting the country moving once again through investment and growth.”

The new Exchequer Secretary, Dan Tomlinson, responded to the debate for the government, just two days after his appointment. Like the Chief Secretary he would not get into discussion about what might be in the Budget. However he pointed out that property taxes already “make a significant contribution to the public finances, raising more than £75 billion a year… They help to provide a broad tax base, which underpins good fiscal policy.”

The new minister reiterated some of the measures introduced by the Chancellor at the last Budget: “abolishing the non-domicile tax status; raising the rates of capital gains tax; limiting inheritance tax reliefs; and increasing air passenger duty for private jets.” He added that, “[t]hanks to the work of my predecessor and the great work of HMRC officials, whom I am looking forward to working with, we are also increasing work to make sure that the wealthy pay their fair share of the tax that they owe.” He said that these changes demonstrated “the fundamental truth of politics in 2025”, namely that “[t]he bedrock of this Labour government is fiscal responsibility, while the cornerstone of the Conservatives’ economic plans is fiscal fantasy.” 

He concluded that, “as the new Exchequer Secretary to the Treasury, I look forward to returning to this chamber and to committee corridor on many occasions to discuss tax policy. The people of this country work hard for everything that they earn. They deserve an efficient and fair tax system, whether that tax relates to property or other areas, and for governments to spend every penny of public money wisely. That is why everything we do is underpinned by fiscal stability, our sticking to our rules, and our managing the public finances well in this uncertain world.”

You can read the full debate here and continued here.