Financial experts are warning that Andy Burnham, the likely next Prime Minister, is set to inflict significant tax hikes on taxpayers in an autumn Budget that could be a nightmare for homeowners, investors, and families planning to pass on assets. The warning comes as Burnham's potential appointment of a Chancellor, possibly even Ed Miliband, raises fears of further fiscal pain on top of the two budgets already delivered by Rachel Reeves.
Property Taxes: A Major Target
One of the biggest areas to watch is property taxation, according to Alex Pugh, chartered financial planner at wealth manager Saltus. Burnham has previously backed proposals to replace council tax and stamp duty with an annual levy based on a property's value. Under the proposal, homeowners would pay 0.48% of a property's market value each year, rising to 0.96% for second homes, empty properties, and homes owned by non-UK residents. This could lead to homeowners in the south of England paying up to three times as much as those in the north, where Burnham is popular.
Pugh noted that millions hold a substantial proportion of their assets in residential property. "While removing stamp duty may benefit those buying and selling homes, a recurring levy based on property values could significantly increase annual costs for all homeowners," he said.
Income and Investment Taxes
Last September, Burnham stated there is "definitely a case" for restoring the 50p additional rate of income tax for top earners. This would come on top of the freeze on tax thresholds, which is slated to run until 2031. Pugh commented, "The concern is not simply whether a 50p rate returns, but the wider direction of travel on tax." He questioned why people should work hard when HMRC takes more than half of their income.
Capital Gains Tax Changes
Burnham has not made specific pledges on capital gains tax (CGT), but former Transport Secretary Louise Haigh, now a key Burnham adviser, is pushing for CGT bands to be aligned with income tax. This would come on top of recent cuts to the CGT annual exempt amount, which is now just £3,000. Pugh warned that CGT could gradually become more strict over time, hitting second homes, buy-to-lets, non-ISA investment gains, and business sales. "It could be detrimental to investment and growth, disincentivising both domestic entrepreneurship and making the UK a weaker option for global capital," he said. Rules that end CGT liability at the point of death may also be overturned, effectively creating a 'double death tax' when combined with inheritance tax (IHT).
Inheritances and Social Care Levy
Burnham has also spoken about replacing IHT with a "social care levy" charged on inherited assets. Pugh said, "This may sound attractive politically, but for families it introduces another period of uncertainty." This could make planning difficult as families won't know if the goalposts are about to change. Uncertainty around wealth taxation can affect long-term financial planning decisions, Pugh added. "The lack of clarity can often be as damaging as the tax increase itself."
Those who hoped replacing Reeves would be a step in the right direction are likely to be disappointed. "The tax environment is likely to become more challenging, rather than less," Pugh stressed. While any changes remain speculative, homeowners, investors, and families planning to pass on assets should keep a close eye on what Burnham does next.
