Editor's note: This brief was summarised by The Property AI Newsroom from a report by Guardian Property. Read the original article for full details.

Andy Burnham Considers Major Reform of UK Property Taxes

Andy Burnham is considering changes to property taxation in the UK, according to a Guardian Property report. The Prime Minister is exploring options to raise revenue for social care and defence, with potential reforms to council tax and stamp duty under discussion.

Currently, council tax, stamp duty land tax, and capital gains tax are the main taxes on English residential properties. Council tax is based on 1991 property values and is divided into bands from A to H, with additional bands being introduced at the top end. Property taxes in Scotland, Wales, and Northern Ireland are managed by devolved administrations, each with their own systems. Landlords in the UK pay income tax on rental profits, and companies pay business rates based on rental value.

The UK collects more from property taxation than any other country in the OECD. The Office for Budget Responsibility has estimated council tax receipts will reach £51bn in the 2025-26 financial year, with £34bn from business rates and £17bn from property transaction taxes, including stamp duty.

Council tax has faced criticism for being regressive, impacting low-value homes more heavily, and for varying rates across the country. Stamp duty, which applies to home sales, is considered progressive as it takes a larger share from higher-value homes, while many lower-value transactions are exempt. Second homes are subject to both stamp duty and capital gains tax on profits from sales.

Burnham’s advisers have indicated that the Prime Minister is interested in capturing more property wealth through a single annual tax, potentially involving a comprehensive reform of council tax and the abolition of stamp duty. Implementing such a change would require a full revaluation of homes in England, a process that would need significant staffing at the Valuation Office, though artificial intelligence is expected to assist.

A flat-rate tax based on land or property valuations has been suggested as a way to benefit poorer areas and provide the government with a stable income, as it would be collected regardless of economic conditions. In contrast, stamp duty and capital gains tax revenues tend to decrease during recessions.