We're about to move house and pay £93,000 stamp duty: Should we pull out on rumours tax could be axed?

We bought our current flat in July 2020. We exchanged on the Monday, and on the Wednesday, Rishi Sunak suddenly reduced stamp duty rates, which would've saved me £15,000. I was gutted.

Now, it looks as if we might get shafted again. We need to upsize as we've had another child, and have spent a year finding the right house and getting a buyer for our flat.

The seller wants to exchange by 30 September - so it was extremely stressful to read about a potential overhaul of stamp duty rules in the Autumn Budget in October.

The house we're buying costs £1.5million and the stamp duty would be £93,000. If one month later stamp duty is scrapped, I will absolutely lose my mind.

Although our house is expensive, it's the going rate for a family-sized home in our part of south London and we're taking out a big mortgage. If paying £93,000 can be avoided or delayed at all, it would be a huge financial boost.

Should I try to delay the purchase until after the Budget, even if we risk losing it? Or would the 'annual tax' system being proposed be better for us, and we should wait?

Ed Magnus of This is Money replies: Speculation about new property taxes has been rife this week, leaving home buyers like you worried and frustrated.

Your question relates to reports that Rachel Reeves is considering plans to scrap stamp duty and council tax in favour of a new system.

Potentially, it could see the stamp duty bill homeowners pay on purchase could be scrapped in favour of an annual tax for homes above £500,000.

This is what has you worried, as you are about to hand over a very substantial sum in stamp duty.

Separately, it has been rumoured that homes above £1.5million may be subject to capital gains tax when they are sold - which could affect you down the line.

While nothing is confirmed, it's understandable that you are looking for advice.

We spoke to Jo Eccles, founder and managing director of property search company Eccord, Angela Kerr, a director at property advice website HomeOwners Alliance, Nigel Bishop of buying agency Recoco Property Search and Henry Pryor, a professional buying agent.

Ed Magnus replies: Although it is yet unclear how an overhaul of stamp duty would work, one idea being mooted is to replace stamp duty with an annual national property tax.

At the moment, home movers pay nothing on properties that cost less than £125,000. On the amount from £125,001 to £250,000, they pay 2 per cent, then on the portion from £250,001 to £925,000, they pay 5 per cent.

Between £925,001 to £1.5million it increases to 10 per cent and then 12 per cent is charged on anything upwards of that. First-time buyers have different thresholds.

But Rachel Reeves is reported to be considering changing that, having been inspired by a new system proposed by Tim Leunig, chief economist at centre-right leaning think-tank Onward, in a report last year.

Mr Leunig suggests the current stamp duty is replaced with a new annual property tax, but only on homes over £500,000. On homes between £500,000 and £1million, there would be a levy of 0.54 per cent. Above £1million, the levy would be 0.81 per cent.

That would mean someone buying a £1.5million home - such as yourself - would see an annual property tax of £6,750 from this first part of the plan.

The second part of Mr Leunig's revolution would be a local property tax to replace council tax.

Those who own properties valued at £500,000 or above, would pay £2,200 per year under this plan, with those in cheaper homes paying less.

If this plan was enacted, it means you would end up paying £8,950 in property taxes per year. Those sums could also rise annually in line with inflation.

Chancellor Rachel Reeves is also rumoured to be considering charging some homeowners a levy if they sell their home and make a profit.

At the moment, people don't have to pay capital gains tax if they sell the home they live in and the price has increased since they bought it.

But according to The Times, Reeves is considering changing the rules so that capital gains tax would become payable on the sale of homes worth more than £1.5million.

On residential property, capital gains tax is currently charged at 18 per cent for basic rate taxpayers, and 24 per cent for higher rate taxpayers – but with any significant gain, people are likely to pay most of it at the higher rate.

This is because a capital gain is added to a person's normal income to decide the tax rate.

The Times said a threshold of £1.5million would hit around 120,000 homeowners who are higher-rate taxpayers with capital gains tax bills of £199,973.

Both plans are reported to be potential announcements at the next Budget, in October or November - but could take much longer to be made law.

Henry Pryor replies: Don't put your life on hold. Move if you can afford to, and you're confident that you will be able to continue to afford to.

Even if this does happen, we expect that people who have bought in the last ten years and paid stamp duty will be exempt from the new annual tax.

Angela Kerr replies: Tax changes will be mooted non-stop between now and the Budget, and most estate agents would say serious buyers don't delay their move based on speculation.

If you try to hold back, you risk upsetting your seller or even losing the property as you say.

And with this Budget traditionally falling in late October or early November, and your seller pressing for September, you might on balance be better to keep things moving.

Keeping your foot on the gas, without cutting corners on surveys and proper financial advice along the way, whilst keeping abreast of what's happening in the Treasury, would be prudent.

I'm not a tax expert, but most signs suggest taxes are unlikely to go down, especially on £1.5 million houses.

Jo Eccles replies: You are certainly not alone in feeling uncertain. There has been so much speculation in recent days about whether or not the Chancellor might scrap stamp duty, impose an annual property tax or a so-called 'mansion tax' charged at the point of sale, but they are just rumours.

Having worked in the property industry for almost 20 years, I've seen plenty of these pass by, never coming to fruition, but they can create significant anxiety for buyers.

It's very likely that property taxes will be reformed in some way in the coming years, but my advice would be to avoid trying to second guess what might happen - and remember that policy risk can cut both ways.

Nigel Bishop replies: I understand your predicament. It's worth noting that the Government might not implement the tax change with immediate effect but, instead, introduce it in the new tax year which would be April 2026.

Jo Eccles replies: While it's possible that stamp duty could be scrapped or reformed in the Autumn Budget, it's equally possible that an annual property tax could be imposed on new transactions.

Many buyers fund stamp duty out of equity in their existing property, so although it's painful, you may not notice it as much as you would an annual bill which coming out of your household income.

Whether you ended up worse off overall would depend on how long you owned the property.

There's no getting away from the fact that stamp duty bill is a major expense but try and consider it in the context of long-term home ownership.

Buying decisions should be based primarily on life stage, affordability and the suitability of the property.

If you've found the right home after a year of searching (and you clearly need more space), don't jeopardise that by trying to delay. There is a significant lifestyle consideration when buying a property, not just financial.

And you could end up back at square one if the seller loses patience or another buyer swoops in.

Angela Kerr replies: The problem with discussions about tax reform is that they unsettle people and undermine confidence, and the housing market runs on confidence.

On a practical level, while short-term tweaks to stamp duty could be announced in the Budget and take effect overnight, commentators seem to think that the bigger reforms being discussed of scrapping stamp duty and replacing it with a new property tax would require legislation.

So if stamp duty were scrapped, it wouldn't suddenly happen a few months later. And under proposals from the think tank Onward, anyone who had recently paid stamp duty would be exempt from the new tax.

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Nigel Bishop replies: I advise you to carefully review your current position and opportunity. You explained that it took you one year to find a property within your budget that meets your family's requirements.

Should you decide to pass on this purchase, you could face three consequences.

Firstly, it might take you another year to find a suitable property which means you and your family will have to continue living in your current space that, according to your letter, is already feeling too small.

Secondly, even if stamp duty gets revoked and sellers carry the costs, it is likely that sellers will add the expense to their asking price which will see property prices go up which, in turn, narrows the selection of properties in your price bracket.

Lastly, you are in a fortunate position to have a buyer for your apartment who, I assume, is willing to pay the asking price - a scenario that can't be guaranteed in the future.

With these points in mind, it really comes down to your personal circumstances and whether you and your family are eager to move now or can accept the potential consequences of postponing your purchase.