New Prime Minister Andy Burnham has indicated that Londoners could face higher council tax as part of a broader property tax overhaul to redistribute wealth to England's regions.
In an interview with the BBC's Panorama, Burnham said: "There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London." He added that former Chancellor 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."
Property tax reforms
Reeves introduced a "mansion tax" on homes worth £2 million and above, the vast majority in London or the wider South East. The government also cut central funding for some boroughs with low council tax, such as Westminster, forcing them to impose large hikes.
Burnham described Reeves' actions as a "start," suggesting he is planning further changes to property tax to raise more money from London and the South East. He has previously backed a new proportional property tax to replace council tax and stamp duty, which would cost London an estimated £7.5 billion. The tax would be charged at 0.48% of a property's value, rising to 0.96% for second homes, empty homes, and those owned by foreign nationals.
However, Burnham downplayed the likelihood of imminent major reform, stating: "It's just not the case that we are bringing forward plans, on that scale, at this moment in time." He did not rule out significant changes in the autumn Budget or later years.
Inheritance tax and social care
Burnham is seeking cross-party talks to address the social care crisis, previously pledging to expend "whatever political capital I have" on fixing the system and warning the NHS "will collapse" otherwise. Reports suggest he is considering a 10% tax on all inheritances to fund social care. Work and Pensions Secretary Pat McFadden declined to rule out such a move.
Currently, inheritance tax is charged at 40% on estates worth more than £325,000, or £500,000 if it includes a home passed to children. Around £1 in £4 of inheritance tax is already paid by Londoners, rising to £2 in £4 when including the wider South East. A 10% charge on all inheritances would partially equalise the proportion paid by London but still leave the capital as the biggest contributor.
Bank levy and income tax
Barclays reported a 17% rise in pre-tax profit to £6.1 billion for the first half of 2026, driven by investment banking. The Trades Union Congress is urging Burnham to increase the bank surcharge by between £9 billion and £60 billion over four years.
Burnham has floated raising the income tax threshold from £12,570 to help the less well-off but also said he may be "asking for a little bit more" from the better off. While specific tax proposals remain unclear, London is expected to bear the brunt of any increases.
