6 ways Burnham’s tax plans could hit your money
Key Points
- Andy Burnham backed a 0.48% annual property tax to replace council tax and stamp duty
- A £1m home would pay £4,800 a year under the Fairer Share model
- Burnham proposed replacing inheritance tax with a care levy paid by all estates
- CGT aligned with income tax would push the top rate to 45%
- Income tax, VAT and National Insurance rates would stay unchanged
Andy Burnham is expected to replace Keir Starmer as Prime Minister following his by-election victory in Makerfield, and his past statements point to tax changes covering property, inheritance and capital gains that could affect millions of UK households.
Nothing has been confirmed, and Burnham’s first major economic speech on Monday (29 June) was largely silent on tax beyond a pledge to reform business rates for pubs and high streets.
His record of public comments, however, gives a clear indication of where a Burnham government could move. Rebecca Williams, Financial Planning Divisional Lead at Rathbones, has put together six areas to watch.
Council tax could be replaced with an annual property levy
Burnham told The Times on 22 May that he had “long been persuaded of the argument for a land value tax”, describing council tax as “a highly regressive tax” built on property valuations unchanged since 1991.
He is listed as a supporter of the Fairer Share campaign, which proposes replacing council tax and stamp duty with an annual levy of 0.48% of a property’s value. Under that model, the owner of a £250,000 home would pay £1,200 a year, while a £1m homeowner would pay £4,800. A typical home would incur around £860 a year in Newcastle, £1,300 in Manchester and almost £2,700 in London.
Stamp duty could be scrapped
Burnham said he would like stamp duty to go, calling it “an incredibly unfair tax” that “prevents downsizers from moving and stops first-time buyers from getting started”.
Abolition would cut the upfront cost of moving home. Any saving would likely be offset by the new annual property charge that replaces it, so overall costs for homeowners would depend on the value of their property and how long they stay in it.
Inheritance tax could become a care levy
Burnham said in 2023: “I would abolish inheritance tax in its current form, but replace it with a care levy which everybody would pay, but obviously the wealthiest would pay the most.” As Health Secretary in 2009, he advocated a flat 10% levy on all inheritance to fund social care.
A 10% flat levy would cut the bill on a £1m estate to £100,000, compared with £200,000 under current inheritance tax rules after £500,000 of tax-free allowances. It would also pull millions of smaller estates that currently pay nothing into the net for the first time.
Capital gains tax could rise sharply
Burnham’s stated view that wealth is undertaxed relative to work has fuelled speculation that capital gains tax rates could be aligned with income tax rates, which currently stand at 18% for basic-rate taxpayers and 24% for higher earners.
Alignment would push the top rate to 45%, meaning an additional-rate taxpayer realising a £50,000 gain outside ISAs and pensions would face a £21,150 bill, up from £11,280 under existing rules.
Analysts also warned that scrapping the CGT uplift on death could land beneficiaries selling a family home that had appreciated by £500,000 with a tax bill approaching £120,000. The annual CGT exemption has already fallen from £12,300 to £3,000 over recent years.
Income tax rates stay, but the freeze bites
Burnham said he would keep the 2024 Labour manifesto commitment not to raise income tax, VAT or National Insurance rates during this Parliament.
Frozen thresholds still push up bills through fiscal drag, as pay rises move workers into higher bands without any rate change. Burnham acknowledged concerns about the frozen personal allowance and proposed a review, though no firm commitment has followed.
Second homes and high-value properties face bigger bills
The Fairer Share model doubles the annual charge to 0.96% for second homes, empty properties and homes owned by overseas buyers. A £3 million property would attract an annual charge of roughly £14,400 under the standard 0.48% rate alone.
This would come on top of the high-value council tax surcharge already legislated to take effect from 2028, which applies an annual charge to homes valued at £2 million or more.
No legislation has been tabled and no formal policy document has been published, but some buyers are already factoring anticipated value corrections into offer prices for high-value homes.
