Capital Gains Tax applied to profits made on main residences – a possible Budget measure next month – would make the vast majority of home owners less likely to put their properties on the market. 

That’s the conclusion of a poll of 1,000 owners conducted for financial brokerage Boon Brokers.

Under the current UK tax system, main residences are exempt from Capital Gains Tax, which is instead only payable on profits from the sale of second homes, investment properties, shares, and other assets. 

However, speculation ahead of the November 26 Budget suggests that the Treasury is considering CGT reform, with some analysts mooting the tax could even be applied to profits made from the sale of primary residences – although no details on thresholds, tax rates, and exemptions have been publicised. 

In response to questions in the Boon Brokers study, 71% of respondents stated that the reforms would make them less likely to sell their main residence, indicating that, if implemented, a significant proportion of homeowners may choose to postpone selling in order to avoid additional taxation.

Details of the findings show that a reluctance to sell would be consistent across all age groups. 

Among respondents aged 18-24, 76% said they would be less likely to sell their main residence if CGT were applied, compared with 63% of those aged 25-44, 68% of those aged 45-54, and more than 80% of respondents aged 55 and over. 

Gerard Boon, managing director, comments: “Introducing Capital Gains Tax on main residences could have serious consequences for the housing market. When fewer homeowners are willing to sell, supply will naturally constrict, driving up competition and prices. This imbalance between supply and demand doesn’t just impact affordability, it would risk stagnating the market and placing greater pressure across all levels of the housing market.”

A further finding of the research was that, in response to the question “Do you believe it is fair for the government to apply Capital Gains Tax to main residences that were previously exempt?”, some 73% of respondents stated that applying CGT to main residences would be unfair. And 97% of respondents disagreed that applying CGT to primary homes is the fairest way to balance public spending, revealing a strong opposition across all demographics.

The commissioned survey also explored public opinion on how the proposed CGT changes might influence support for the current government. Respondents were asked: “How do you think this tax change will impact Labour’s chances of re-election in the next general election?”

The results found that the proposed CGT reform could also carry political repercussions, with 78% of respondents believing it would reduce Labour’s chances of re-election. Of these, 45% stated it would significantly reduce Labour’s chances, while 33% said it would slightly reduce the party’s chances at the next general election.