Under the headline How Rachel Reeves could launch a tax raid on your home The Telegraph has published an article highly critical of the tax regime under Labour.

It can be seen here, and says that Labour has not shied away from making enemies during its first year in power. Pensioners, employers, farmers, non-doms and parents with children in private schools have all been squeezed by the taxman. Now ministers appear to be preparing to tap a fresh source of revenue: the homes of middle-class families.

For the Treasury, the potential prize is vast. Property taxes already raise £58bn a year through council tax and stamp duty – the fifth-largest contributor to government coffers after income tax, National Insurance, VAT and corporation tax. A redesign of the system could bring in billions more.

But with that prize comes political peril.

“The cliché about an Englishman’s home being his castle is a cliché for a reason,” says political analyst James Frayne. “It’s rooted in a deep-seated obsession with homeownership, and a belief that the state shouldn’t cross the threshold. Going after people’s homes is politically toxic – it risks collapsing trust altogether.”

The scars of past missteps still linger. The Conservatives’ 2017 social care manifesto pledge, which threatened older voters’ homes, was so unpopular it arguably cost them their majority. Labour risks a similar backlash if it mishandles reform.

Annual property levy

The most radical idea in circulation is an annual property tax to replace stamp duty. Instead of a one-off charge on buyers, households would pay a yearly levy based on the value of their home.

Think tank Onward has proposed charging 0.54pc on the portion of a home’s value above £500,000, with a 0.28pc supplement over £1m. The owner of a £1.5m house would face a £9,500 annual bill – and many London families would be caught, since the capital’s average property price now tops £561,000.

Supporters argue a levy would remove the distortions created by stamp duty, which discourages people from moving. Tom Bill of Knight Frank says: “Getting rid of stamp duty would oil the wheels of the housing market. But the Government must be careful where it sets the threshold – otherwise it will be the squeezed middle, not the wealthy elite, who feel the pain.”

Capital gains raid

Another proposal under active discussion is ending the long-standing exemption from capital gains tax (CGT) on primary residences, at least above a certain value. Reports suggest the Treasury is eyeing a £1.5m threshold.

That would mean higher-rate taxpayers paying 24pc on gains from selling their home. Critics warn it would freeze the market at the top end and potentially lose the Treasury money, as wealthier owners simply refuse to move.

Paul Johnson, former head of the Institute for Fiscal Studies, was blunt: “It would gum up the housing market hopelessly… I can’t believe they’re considering it.”

Council tax overhaul

Most economists agree that council tax is outdated and regressive. Bands are still based on 1991 valuations, leaving poorer households often paying more than those in affluent areas. A family in Hartlepool typically pays more than double the bill faced in Westminster, despite much lower house values.

Labour has previously floated reform. Adding new higher-value bands would tilt the burden onto wealthier areas, especially in London and the South East. A full revaluation would create obvious winners and losers – and near-certain uproar.

Land and inheritance

Some within Labour favour a more radical shift: a land value tax, targeting the site rather than the building. Advocates say this would be fairer and harder to avoid, though experts warn it would take years to implement.

Inheritance tax reliefs are also in the Treasury’s sights. At present, couples can pass on up to £1m tax-free if a family home is included. Scrapping that allowance could raise £2bn annually, but at the cost of forcing tens of thousands of grieving families to sell their parents’ homes.

International comparisons

Property taxation elsewhere offers clues. In the US, annual property levies are a core part of local government finance, and homeowners accept them as routine. France, by contrast, experimented with a wealth tax on property and other assets – only to scrap it after it drove out investment. Germany is introducing a land-based system, but after decades of consultation and gradual rollout.

Britain’s challenge is political as much as technical: persuading voters that any new system is fair.

The wider housing market

The risk is that measures designed to hit the very wealthy end up catching ordinary homeowners and distorting the market. That has knock-on effects beyond owner-occupiers. Landlords in the private rented sector (PRS) have already faced higher mortgage costs, reduced tax reliefs and tighter regulation. If property taxes climb further, many could exit the sector, constricting supply and pushing up rents.

According to Hamptons, average gross rental yields in the PRS hover around 6pc outside London – far higher than the 3–4pc implicit yield a homeowner effectively receives by living rent-free in their own property. If new levies make owner-occupation less attractive, pressure could grow on an already stretched rental market.

Political stakes

Frayne is sceptical that Labour can manage the balancing act: “Taxes on property intersect with two of voters’ strongest instincts – protecting their homes, and resisting retrospective changes. It’s a lethal cocktail.”

With income tax, VAT and National Insurance ruled out by manifesto pledges, the Treasury’s options are narrow. That is why Rachel Reeves may be tempted to risk the political backlash. But if she miscalculates, Labour could discover that, in British politics, there is no surer way to lose middle England than by taxing the roof over its head.