Rachel Reeves is drawing up plans for a fresh raid on homeowners in the Budget as she struggles to balance the books and grow the economy.
Treasury officials are expected to push the Chancellor to consider a mansion tax on property sales as well as more radical options including annual levies that would disproportionately hit homeowners in London and the South East.
It is understood Ms Reeves has ordered officials to review Britain's complex web of property taxes ahead of the Budget in order to identify ways to boost the economy. Economists have warned that the current system is holding back growth.
Improving productivity will form a key plank of Ms Reeves's second Budget and changes to the property tax system are expected to form part of these plans.
The International Monetary Fund (IMF) and Institute for Fiscal Studies (IFS) have both called on Ms Reeves to scrap stamp duty on house sales, with the think tank branding the levy Britain's "worst and most damaging tax".
Experts say the tax discourages people from moving, with a knock-on effect for the broader dynamism of the economy.
Sources said any changes would be designed to "protect revenue", in a clear sign that taxes on higher-value properties will have to rise if the Chancellor does overhaul the system.
Property taxes including stamp duty are forecast by the Office for Budget Responsibility (OBR) to raise £15.7bn this year, rising to £26.5bn by the end of the decade. Council tax is forecast to raise £50bn this year.
The desire to protect this tax income raises the prospect of the Chancellor introducing new council tax bands on the highest value properties in England, or a more radical recurring property tax on homes valued above a certain amount that could replace stamp and council tax.
However, government sources vigorously denied a report in the Guardian that said the Treasury was examining proposals that would see sellers face a new "national tax" on houses worth more than £500,000 when they sell their home.
"That's definitely not going to happen," said one source close to the Treasury.
Analysis of Land Registry data by Hamptons shows that 50pc of English home sales over £500,000 are currently in London, with a further 26pc in the South East.
Treasury officials have pushed previous chancellors to replace stamp duty and council tax with an annual tax on property or land values.
Such a move would prompt a political backlash. Margaret Thatcher was forced to shelve a fixed tax to fund council services in the 1990s after Conservative plans for a poll tax sparked riots.