Prime Minister Andy Burnham has hinted at a major overhaul of council tax and stamp duty, suggesting that the current system is unfair and in need of reform. Speaking to the BBC, Burnham said former Chancellor Rachel Reeves was 'right' to begin reforming the tax to make it fairer 'in relation to people in homes that are much greater value, who haven't seen their council tax go up over the years because of the failure to revalue the banding'.
Current system outdated
Council tax, introduced in 1993, is still based on property values from 1991. Over the past 35 years, property values have shifted unevenly across the UK, creating disparities. For instance, soaring housing demand in London has pushed up prices far faster than in the north-east of England, meaning some of the wealthiest homeowners pay a smaller proportion of their property's value in council tax than those in poorer regions.
Possible replacements
According to the i paper, Burnham's government is exploring options to replace both council tax and stamp duty. One proposal from the campaign group Fairer Share, which gathered over 100,000 signatures on a petition, is a 'proportional property tax' – a flat rate of 0.48% on current property value, paid by owners. This would mean tenants no longer pay property tax directly.
Burnham has long supported a land value tax (LVT), which he proposed during his first Labour leadership bid in 2010. This tax would be levied annually on the market rental value of land, not the buildings on it. He wrote then that LVT would 'allow for the abolition of stamp duty', which he called a 'tax on the aspirations of young people'.
Impact on households
Fairer Share claims that over three-quarters of households would pay less under their proportional property tax, but some could face steep increases. Since owners pay the tax, tenants in rental properties would no longer bear property tax. This would shift funding for local services like road maintenance partly to landlords who may not live locally.
A land value tax would be equally radical, likely requiring a phased introduction, as millions of homeowners – especially in southern England – could face significantly higher tax bills. Questions remain about how it would affect asset-rich but income-poor individuals, such as elderly homeowners who bought large houses decades ago.
Political challenges
Both proposals represent a fundamental upheaval of UK property taxation, requiring substantial political effort to implement. Burnham launched his Makerfield by-election campaign stating, 'I see a big case for land and business and property tax to be changed,' fueling speculation of a full-scale overhaul.
