Prime Minister Andy Burnham is facing calls to abolish council tax and stamp duty in favour of a new property tax system, according to campaigners and tax experts. The current council tax system, introduced in 1991, is based on property values from that year and has been widely criticised as outdated.
Proposed Alternatives to Council Tax and Stamp Duty
One option being floated is a strengthened transaction tax, which would remove principal private residence relief (allowing main residences to avoid capital gains tax) and impose a levy on capital gains from any property sale, even if the property was bought decades ago at lower prices. This would effectively tax gains that have accrued over time.
Dan Neidle of Tax Policy Associates has proposed a land value tax set at around 1.3% of land value. Other groups have suggested rates between 0.48% and 1%. Currently, stamp duty and council tax together raise approximately £57 billion annually. At the 1.3% rate, at least 63% of people would be immediately better off compared with their current council tax payments, and in the long term the economic boost could benefit everyone.
Burnham's Stance on Property Tax Reform
Mr Burnham has previously described council tax as “highly regressive” and has backed the Fairer Share campaign, which advocates for a proportional property tax to replace both council tax and stamp duty land tax (SDLT). He has argued that the current system benefits wealthier homeowners at the expense of lower-income families.
He has also long supported a land value tax (LVT), an annual tax based solely on the value of the land itself, excluding any buildings or improvements. In an interview with LBC four years ago, he called it a “very productive form of taxation because you make sure land is used for good, productive purposes, and if people are sitting on it and hoarding it, they get taxed and that money can come back and be redistributed.” He believed such a tax could replace stamp duty.
Next Steps and Budget Timing
Last month, the new prime minister ruled out an overhaul of property taxes in the next budget, due on 28 October. However, according to The Guardian, this suggests he may “go large” with sweeping reforms in 2027. The outcome remains uncertain, but the pressure for change is mounting.
