Labour Reportedly Considers Scrapping Council Tax and Stamp Duty
Potential overhaul targets decades-old property valuation system amid calls for fairness.
Sarah Connor
Andy Burnham is reportedly considering the abolition of both council tax and stamp duty, a move that would fundamentally reshape property taxation across the UK.
This historical stagnation fuels widespread dissatisfaction; Andy Burnham previously voiced support for a proportional property tax (PPT), a system advocated by the Fairer Share campaign.
Burnham stated, "There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London," highlighting geographical inequities that have festered for decades.
Council tax is one of the most unfair taxes in Britain, and nowhere is that injustice clearer than in towns like Hartlepool.
Jonathan Brash, Labour MP for Hartlepool and chair of a cross-party group on council tax reform, asserted, "Council tax is one of the most unfair taxes in Britain, and nowhere is that injustice clearer than in towns like Hartlepool."
Labour faces sustained pressure from its back benches to reform council tax, driven by widespread dissatisfaction with the existing structure and its profound impact on ordinary citizens.
The party was elected on a 2024 manifesto; this potential reform aligns with broader efforts to address cost-of-living concerns that grip the nation.
Economically, a shift to a proportional property tax would significantly alter household finances; an average UK house, valued at £271,000, would incur an annual charge of £1,301 under this proposal.
This contrasts sharply with stamp duty, currently payable on sales from £125,000, which offers relief for first-time buyers up to £300,000 but ceases for purchases over £500,000; the new tax would represent a consistent annual burden, unlike the one-off stamp duty.
Two potential replacement options emerge: a proportional property tax, an annual charge of 0.48% on current home value, or a land value tax, an annual charge based on land value.
The Tax Policy Associates (TPA) revealed that towns like Blackpool would be among the biggest beneficiaries of the proposed plan, with homes in the cheapest parts potentially paying next to nothing.
The Fairer Share Campaign claims a flat-rate annual charge could save households in areas such as Hartlepool about £950 a year; beyond taxation, Mr. Burnham announced plans for significant devolution of power and a large council homes building program, indicating a broader reform agenda.
These initiatives aim to reshape local governance and housing provision, fundamentally altering the landscape for millions.
Early measures to reduce the cost of living, such as removing VAT from electricity bills, have already been introduced by Mr. Burnham, a clear commitment to immediate relief.
Mr. Burnham acknowledged previous efforts, stating, "So the Chancellor before, Rachel Reeves, was right to start to reform council tax to create some fairness there in relation to people in homes that are of much greater value, who haven’t seen their council tax go up over the years because of the failure to revalue the banding."
Ms. Reeves had previously introduced a 'mansion tax' on properties worth £2 million or more, primarily impacting homes in the capital or wider South East, an earlier attempt at reform targeting high-value properties.
The landscape of local government funding shifted dramatically when Sir Keir Starmer's government reduced central government funding for some London boroughs, leading to subsequent council tax increases in those areas.
This reduction forced local authorities to raise their own revenues, often through increased council tax, a system with valuations frozen for decades that continues as a point of contention across the country, prompting calls for comprehensive reform.
Treasury officials examine an overhaul to property tax where valuations and bands would be set nationally, but money collected and spent locally, a radical departure from current practice.
Mr. Burnham stated, "We need to honour the manifesto upon which Labour was elected, and if I was to bring forward any changes, obviously people would rightly say, well, is this consistent with that manifesto?"
Andy Burnham and Labour are just looking for more ways to tax middle England, and raise taxes on people's homes. This is just smoke and mirrors from the party that has already hiked both council tax and stamp duty. The Conservatives are the only party that will keep tax on the family home down – including by scrapping stamp duty entirely for primary residences.
James Cleverly criticised the proposals, stating, "Andy Burnham and Labour are just looking for more ways to tax middle England, and raise taxes on people's homes."
Cleverly added, "This is just smoke and mirrors from the party that has already hiked both council tax and stamp duty," further claiming, "The Conservatives are the only party that will keep tax on the family home down – including by scrapping stamp duty entirely for primary residences."
Downing Street denied the government actively considers replacing council tax and stamp duty with a levy based on property or land values, despite claims that Number 10 actively considers a 0.48% annual charge or a land value tax.
Mr. Burnham concluded, "So there are big decisions ahead, you are right about that."