Rachel Reeves is facing mounting criticism after reports emerged of a radical plan to replace stamp duty with a new property tax targeting homes worth over £500,000.

The Chancellor has been warned that such a move would risk destabilising the housing market.

Shadow Chancellor Mel Stride accused Labour of yet another tax grab, saying: "Labour can equivocate all they like, but we know they are drawing up plans to raise taxes yet again at the Autumn Budget. Keir Starmer and Rachel Reeves promised not to raise taxes on working people, then introduced a £25 billion Jobs Tax, which will leave the average working household £3,500 worse off."

The Treasury is reportedly considering a national property tax on owner-occupied homes valued above £500,000, payable when the property is sold. The sum would depend on the property’s value and a rate set by the Government.

This new system would replace stamp duty, currently paid by buyers when purchasing property worth more than £125,000.

While no figures have been confirmed, think-tank Onward last year suggested an annual ‘national proportional property tax’ of 0.54% on homes above £500,000, with an additional 0.278% on properties valued above £1 million. Council tax could also be scrapped and replaced with a separate local property levy, starting at £800 a year.

Currently, stamp duty is set at 2% for homes above £125,000, 5% for homes over £250,001, 10% for those above £925,001, and 12% for properties valued above £1.5 million.

The prospect of Labour introducing a sweeping property tax has sparked alarm among homeowners and the housing industry, with critics warning it would hit middle-class families hardest at a time when the cost of living is already biting.