Rachel Reeves’ plans for a new property levy is “council tax in another name” that could hit the elderly the hardest, an expert has warned. The Chancellor is reportedly considering plans to raise money from a tax on the sale of homes worth more than £500,000.

Jeremy Leaf, a London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors, warned the move could disrupt the housing market and needs to be “carefully considered”. He said for more “vulnerable” people, especially those looking to downsize, who don’t have significant savings, the potential changes could be damaging to both them and the taxpayer. Mr Leaf told the Daily Express: “It’s the more vulnerable, perhaps the older people more vulnerable for health or other reasons who perhaps are struggling, [that] this is the straw that breaks the camel’s back.

The Chancellor is reportedly considering the plans (Image: Getty)

“They may think ‘well, really, I can’t afford to live in this place anymore… I’m asset rich, cash poor and I’ve really got to move on’.

“And then you maybe feel you’re being forced to move into somewhere which is a move you’re not really capable [of] or want to contemplate, perhaps moving away from family and friends who do give enormous support and in fact, do probably take a lot of weight financially and physically away from local authorities not providing those services.”

He added: “It may be more of a loss than it is a gain in terms of this change. “It has to be very, very carefully thought through.”

Government officials are looking at a potential national property tax, which would replace stamp duty on owner-occupied homes, The Guardian reported.

No final decision has been made, but it is thought this national tax could help build a model for local levies to replace council tax in the medium term.

Under the existing framework, buyers pay stamp duty if they purchase property worth more than £125,000.

The new levy would be paid by owner-occupiers on houses worth more than £500,000 when they sell their home, with the amount due determined by the value of the property and a rate set by the Government.

Mr Leaf said the plans could be described as “council tax in another name or wearing different clothing”.

He added: “Apart from thinking about the impact on growth and economic activity, I think the present system of stamp duty is a deterrent to many moving, particularly first-time buyers who are absolutely the core of the market because they trade up and allow other people to move on.

“But the impact on jobs and social mobility, not just for growth, but for economic wellness and general satisfaction, it’s absolutely important that is not compromised and it could be and could have consequences for the housing market if a tax is brought in of this kind at the wrong level.”

Ms Reeves will unveil any changes to the Government’s tax policy at a fiscal event, such as a Budget.

A Treasury spokesperson said: “As set out in the plan for change, the best way to strengthen public finances is by growing the economy – which is our focus.

“Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8 billion and cut borrowing by £3.4 billion.

“We are committed to keeping taxes for working people as low as possible, which is why at last autumn’s budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance, or VAT.”