Government under pressure to scrap council tax and stamp duty in Autumn Budget
Key Points
- The government is under pressure from multiple groups to reform the UK's property tax system.
- Calls are growing to scrap council tax and stamp duty, replacing these mechanisms with a single proportional property tax.
- Fairer Share has said that a flat property tax of 0.48% annually would result in most homes paying less in tax than they do now.
- The Resolution Foundation has echoed this call for property tax reform, proposing a 0.7% flat tax on the value of a home, paid by occupiers.
Calls for property tax reform in the UK are growing increasingly loud, with an increasing number of think tanks and pressure groups urging for a new system.
Last week, the Resolution Foundation found that the rest of England was paying £3.1 billion to subsidise London homes under the current system, which raises money through council tax and stamp duty.
It argued that a proportional property tax should be implemented to replace Stamp Duty, a stance which is aligned with the goal of think tank Fairer Share, a group lobbying for a fundamental review of property taxes.
Considering the increasing calls and appetite for property tax reform, Fairer Share is urging the government to launch a fundamental review of property taxes at its Autumn Budget.
Fairer Share argues that both council tax and stamp duty should be replaced with a single proportional property tax.
This simpler and fairer system could deliver a £10.1-billion boost to high streets across the company and would see most homeowners paying less in property tax than they do today.
Fairer Share is proposing replacing council tax and stamp duty with a annual flat property tax of 0.48% on the value of a property, paid by property owners rather than tenants.
According to the think tank’s analysis, this would result in three quarters of households paying effectively less in property tax than they are currently, ending the subsidisation of homes in London identified by the Resolution Foundation.
The Resolution Foundation argues for a higher 0.7% flat rate of tax that would be paid by occupiers.
Both proposals state that this reform should be phased in over time, with stamp duty phased out over time rather than immediately eliminated to prevent a shock to the public finances.
While the proposals for a proportional property tax may differ in the details, it is clear that what was once a fringe idea is becoming a mainstream consideration for uplifting the public finances and making the property tax system fairer across the country.
“With the Autumn Budget due on 28 October, the timing could hardly be better,” Fairer Share said.
“The question is no longer whether our property taxes need fixing. It’s whether the government will act.”
