Andy Burnham plans property tax reform affecting 150,000 households

As the political transition within the Labour Party develops following the resignation of Sir Keir Starmer, potential prime ministerial candidate Andy Burnham is facing scrutiny over reported plans to overhaul the UK property taxation system. While no formal policy platform has been unveiled, reports indicate that the Makerfield MP is considering the adoption of a proportional property tax (PPT) model, a concept championed by the Fairer Share campaign.

This proposed framework would replace the current council tax and stamp duty regimes with an annual levy set at 0.48% of a property’s value. Under the reported plan, the rate would double to 0.96% for second homes, vacant properties, and dwellings owned by overseas investors. Additionally, reports suggest that the threshold for an extra levy could be lowered to include homes valued at £1.5 million, a change that could affect 150,000 households.

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The Fairer Share campaign argues that the current system, which relies on 1991 property valuations, is outdated and inequitable. Andrew Dixon, chairman of the campaign, stated that the approach functions as a de facto land value tax, ensuring that those with the broadest shoulders contribute proportionately. According to analysis, approximately 75% of households could see a reduction in their overall tax burden under such a system.

However, the geographical impact of these changes is expected to be uneven. Analysis suggests that while many households in parts of the north and specific London boroughs—including Barking and Dagenham, Islington, Southwark, and Hackney—might pay less, other areas could face higher property taxes. In the borough of Westminster, it is estimated that 88% of households would face higher charges, with only 12% paying less. Further analysis indicates that a transition to a land value-based system could result in southern homeowners paying an annual average of £1,650, while northerners would see bills of £600.

The proposal has drawn criticism from political rivals. Sir James Cleverly, the Shadow Secretary of State for Housing, Communities and Local Government, described the potential move as a tax on aspiration that would punish families who have invested in their homes. Financial experts have also highlighted logistical challenges. Robert Gardner of Nationwide noted that accurately revaluing land and properties could prove difficult, while Ed Wood, financial planning director at Rathbones, told Lbc that such a major restructuring is unlikely to be implemented in the short term.

Further economic concerns have emerged regarding potential changes to capital gains tax. The Tony Blair Institute for Global Change has reportedly issued a warning to the incoming leadership, arguing that the country cannot tax its way to prosperity. Mr. Burnham is understood to be considering bringing capital gains tax in line with income tax.

Regarding protections for homeowners, reports indicate that any increase in property tax would initially be capped at £1,200 a year for existing homeowners. The cap would fall away once a property is sold, after which the full annual charge would apply under the proposed system. As the leadership process continues, markets remain focused on potential cabinet appointments, with Home Secretary Shabana Mahmood, Energy Secretary Ed Miliband, and former Health Secretary Wes Streeting cited as possible candidates for Chancellor.