What property-tax reform could look like in UK and will Scotland will follow

11th October 2025

The idea of overhauling Britain's property taxes has moved from occasional debate to active policy discussion. Chancellor Rachel Reeves has been reported to be exploring major changes.

From replacing stamp duty with a different levy to rethinking council tax and ministers are quietly preparing options ahead of the autumn budget.

If something significant does arrive from Westminster, Scotland will not be forced to copy it.

Land and property taxes are devolved. But Edinburgh is already reviewing its own rules, and any UK move is likely to prompt Scottish ministers to act (or at least explain why they will not).

What reforms the UK is reportedly considering

Broadly, the ideas under discussion in Whitehall fall into three categories -

Replacing or reworking Stamp Duty Land Tax (SDLT).
SDLT is a one-off tax paid by buyers that can discourage moving. Reports suggest the Treasury is looking at either replacing SDLT for many households with a more proportional tax (for example targeted at higher-value transactions or paid by sellers) or moving toward a recurring/property-value-linked levy for expensive homes. That would smooth receipts and reduce distortionary costs at the point of sale.

Overhauling council tax.
Council tax in England and Scotland is widely criticised as bands are outdated (in England they’re based on 1991 values), it’s regressive at the top end, and it produces volatile local revenue.

Policymakers are discussing options such as re-valuation, adding more bands for high-value properties, or replacing council tax with a modern local property tax. Any major change would be phased to avoid big sudden bills.

Targeted taxes on high-value and second homes.
Measures aimed at higher-value owners — surcharges on second homes, higher LBTT/SDLT bands, or extra levies for properties above a threshold (eg. reports of a £500k touchpoint) — are among the easier politically sellable options for raising revenue from wealthier households.
UK Property Accountants

These options are at the "under consideration" stage: detailed design, rates, exemptions, and transition arrangements are the hard part and will determine whether the reforms are politically feasible and administratively deliverable.
Institute for Government

How would Scotland respond?

Scotland already has its own transaction tax (Land and Buildings Transaction Tax, LBTT), its own council tax system, and the power to change them.

Edinburgh has signalled it will review LBTT rules and has, in recent budgets, already adjusted surcharges on second homes. That means:

Quick policy autonomy: Scotland could mirror some UK changes (for example a higher-value levy) or choose a different path. The Scottish Government has announced a formal review of LBTT legislation, which gives it scope to respond to Westminster reforms on its own terms.

Experts and think-tanks (including the IFS and independent housing researchers) argue Scotland’s council tax is ripe for reform.

Revaluation and adding bands could make it fairer, and the political debate is already live in Edinburgh. If Westminster presses ahead with council tax reform, pressure will grow in Scotland to match that momentum.

Any change that raises or redistributes revenue affects Holyrood’s block grant calculations and local authority funding. The Scottish Government will weigh fairness, political popularity, and the fiscal consequences before signing up to anything similar.

Political and practical constraints

There are three practical truths that will shape outcomes on both sides of the border:

Implementation is hard. Revaluing properties, setting transitional protections (so people don’t face sudden bills), and building an administrative system take time and money. That’s why even popular reforms tend to be phased.

Political sensitivity is high. Property taxes are highly visible: voters notice bills for housing more than most other tax changes. Governments must balance raising revenue and avoiding large, untargeted hits to middle-income homeowners.

Devolution creates divergence. Even if Westminster moves first, Scotland can and likely will tailor its response. That could deepen policy differences on housing and local services funding across the UK.
Scottish Government

What to watch next

Autumn Budget / Chancellor announcements. Any concrete proposals (thresholds, rates, phasing) will probably appear at the next major fiscal statement.

If Revenue Scotland or the Scottish Government publishes options, that will show whether Edinburgh intends to match Westminster or pursue a distinct path.

Councils, homeowners’ groups and housing charities will shape the debate and potentially the design — of any reform.

The UK Government appears likely to press ahead with some form of property-tax reform in the coming months (particularly around SDLT and council tax). Scotland will not be obliged to follow the same reform.

Scottish Government is already reviewing its own transaction tax and faces growing pressure to modernise council tax. Expect divergence rather than a single UK model and Westminster may move first, but Holyrood will almost certainly respond sometimes by copying, sometimes by adapting, and sometimes by setting a different course entirely.