Prime Minister Andy Burnham is facing calls to introduce a proportional property tax – a single flat rate charged annually on a property's value – as he seeks to fund his social care overhaul and rising defence spending. The proposal, put forward by the Fairer Share campaign, suggests a rate of 0.48% of a property's value, doubled for second homes.
Critics argue that the current council tax system is outdated, and experts are urging the Labour leader to consider a more modern alternative. The move would replace the existing council tax, which is based on 1991 property valuations and has been widely criticised for being regressive.
Impact on Households and Regions
Dan Neidle, from Tax Policy Associates, has modelled the potential effects of such a tax. He said: “The biggest winners are deprived North East and coastal towns – Hartlepool, Blackpool, Middlesbrough – where households would pay around £1,600 a year less.”
In contrast, the biggest losers would be in prime London and the commuter belt. Neidle explained: “£550,000 buys you a one-bedroom flat in Kensington & Chelsea. Our model shows that flat pays about £4,000 more in LVT than it paid in council tax; Hammersmith and Camden about £3,000 more.”
He cautioned: “Important to repeat that this is an impressionistic model, and the direction will be correct, but the precise figures will not be.”
Extreme Cases and the Future of Stamp Duty
The starkest differences emerge in the cheapest areas. Neidle noted: “In the cheapest parts of Blackpool the land is worth almost nothing once you subtract rebuilding costs – so those homes, which today pay some of the highest council tax in England, would pay next to nothing.”
At the other end of the scale, he said: “Westminster’s council tax take of roughly £180m would become a land value tax bill of about £1.5bn. The high end: Properties worth hundreds of millions of pounds will, fairly obviously, end up with millions of pounds of annual land value tax.”
The proposal would also see stamp duty abolished, a change that former Chancellor Rachel Reeves reportedly examined in 2025. Neidle added: “Although when looking at the high figures for expensive property, bear in mind that stamp duty is disappearing. So for a new buyer, this is a much more attractive deal than for an established homeowner.”
