Chancellor Rachel Reeves is examining new ways to raise revenue without altering income tax, VAT or National Insurance. Proposals under discussion include taxing the gains on main residences sold for more than £1.5 million, shifting the burden of property tax from buyers to sellers on homes above £500,000, and even introducing an annual levy on higher-value properties. Final details are expected in the Autumn 2025 Budget.
What does this mean for the Scottish housing market? Should all three proposals go ahead, only one would apply across the UK: taxing the gains on main residences sold for more than £1.5 million, as this falls under HMRC’s jurisdiction. Property transaction taxes are devolved, with our own Land and Buildings Transaction Tax (LBTT) and Council Tax already in place. This means that any seller’s levy on properties over £500,000, or any annual levy on higher-value properties unveiled in Westminster, would not automatically extend north of the border.
“High-net-worth clients don’t just compare neighbourhoods,
they compare countries.”
According to Mark Cullerton, CEO of Cullerton’s, the immediate impact for Scotland is less clear. However, as he points out, changes in England will inevitably affect our market too:
“Even if some of the measures are confined to England, they will shape buyer psychology here. High-net-worth clients don’t just compare neighbourhoods, they compare countries. If England suddenly feels more advantageous, Scotland risks losing momentum at the top end.”
To understand the potential implications, we looked more closely at what has been proposed.
The UK Government is reportedly considering ending Private Residence Relief (the normal Capital Gains Tax exemption on your main home) for properties worth over £1.5 million. Any gain on sale would then be charged to Capital Gains Tax, with press briefings suggesting 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers.
Cullerton highlights several key uncertainties: “We would need to wait and see the detail of how the £1.5 million threshold bites: will it be by sale price or by gain; will there be any relief around the threshold; and how inflation will be taken into account.”
Officials have not confirmed details, and the UK Government has warned against speculation. Current estimates suggest at least 6,000 properties in Scotland are valued at £1.5 million and above, with much higher numbers south of the border.
In Scotland’s high-end property market – from Georgian townhouses in Edinburgh’s New Town to large family homes in North Berwick and country estates – the concern is that fewer properties may come to market if long-term owners remain in place to avoid the tax. Downsizing, already a sensitive issue, could become even less attractive.
“The concern is that fewer properties may come to market if long-term owners remain in place to avoid the tax.”
This idea, applying only to England and Northern Ireland, would abolish Stamp Duty Land Tax (SDLT) for buyers of owner-occupied homes. Instead, a new “national property tax” would be paid by the seller when disposing of a home worth over £500,000.
Because LBTT is devolved, any similar change in Scotland would require action by the Scottish Government. Should Holyrood choose not to follow suit, a clear imbalance would arise in the cost of purchasing between Scotland and England. To illustrate, if the proposal were adopted, an English buyer of a £1 million home would pay no upfront tax, while a Scottish buyer at the same price would face an LBTT charge of £78,350.
In the short term, this would place Scotland at a disadvantage. As Cullerton observes: “This could make Scotland a less attractive option to purchase, especially for high-net-worth clients.”
“This could make Scotland a less attractive option to purchase,
especially for high-net-worth clients.”
If the Scottish Government were to introduce equivalent reforms, owners of homes above £500,000 would face the new levy, potentially discouraging sales.
Cullerton emphasises that reform must be handled with care: “Property tax should encourage mobility, not suppress it. We need a balanced system that supports first-time buyers without paralysing the upper tiers of the market.”
For now, nothing has been confirmed. Homeowners should not act in haste, but awareness is vital. With the Budget approaching, our advice to Scottish sellers is clear: stay informed, consider timing carefully, and seek professional guidance. Change is coming, but with planning and the right consultant by your side, it can be navigated successfully.
info@cullertonsproperty.co.uk or 0131 225 5007
