How Rachel Reeves’ Budget reshapes taxes, property and household finances

In a Budget delivered against the backdrop of high taxes, weak growth and mounting pressure on households, Michael Cook of LRG warns that new measures—particularly the high-value council tax surcharge and higher taxes on savings, dividends and property income—risk adding further strain to homeowners, landlords and renters alike, while key reforms such as Stamp Duty remain noticeably absent.

Michael Cook, Chief Executive Officer at LRG, comments:

“Well, Rachel Reeves has hit the market with a Budget that lands with impact, hasn’t she? The Budget reaches into every part of how people live, move and make decisions about their homes. We knew there would be little in the way of good news, and in many respects, it delivered exactly what had been signposted. This comes at a time when the UK is already carrying the highest tax burden in 70 years, and growth remains flat, with GDP rising by just 0.2 % last quarter. With interest rates still elevated and real household disposable income up by only 1.2%, households were already feeling the strain. And with income tax thresholds frozen since 2021 and remaining unchanged for the rest of the decade, people will continue to pay more tax each year even if earnings only rise with inflation; by 2028, someone on £40,000 will be paying around £900 more annually as a result of that freeze alone.

“The new High Value Council Tax Surcharge is the headline measure for property. While it is undeniably a tax on aspiration, it is notably less severe than previously floated. Council tax bandings have not been reviewed since 1991, so change is overdue, but tackling only the very top end risks feeling punitive rather than proportionate. We should also question how viable this surcharge will be in practice: monitoring valuations and collecting the charge will be challenging, and with implementation not due until 2028, this Government may not even be in office to see it through. There is every chance the measure could be revisited or scrapped long before it takes effect. Even so, any shift in behaviour among owners of higher-value homes will feed into the wider market, as activity at this level plays an important role in unlocking chains further down.

“The decision to increase tax on savings, dividends and property income by 2% is also unhelpful, but if I am honest, better than I anticipated…. For landlords, higher taxes arrive alongside the Renters Rights Act and wider regulation, adding to already significant pressures. While most landlords want to remain in the sector, increased costs inevitably influence the homes they keep and the rents they charge. History shows that when operating costs rise, they tend to flow through to tenants, making this a back-door stealth tax on renters rather than landlords. Even in Parliament today, Kemi Badenoch highlighted the risk that higher taxes on landlords places upward pressure on rents, noting that tenants are the ones most exposed when costs rise.

“One notable absence from the Budget was any movement on Stamp Duty. Reforming SDLT remains one of the most effective ways to improve liquidity and encourage both first-time buyers and second movers to take the next step. A missed opportunity here means the market is still without the incentives that would stimulate activity and support the wider economy.

“Capital Gains Tax was also left untouched. That is not a surprise and, arguably, a positive. The Chancellor will know that investment, entrepreneurship and risk-taking are essential if the UK is to grow. We cannot tax our way to economic recovery, and maintaining CGT rates supports those who are putting capital to work, creating jobs and driving long-term growth.

“Overall, this is a Budget that brings change, but perhaps not as severely as many feared. If the government wants long-term stability, greater investment and more choice for families, future decisions must prioritise clarity, balance and practical support, rather than adding further layers of cost onto a market that is already feeling the pressure.”