A cross-party group of MPs and peers has urged the Labour leader-in-waiting, Andy Burnham, to introduce new council tax bands for high-value properties, arguing that the move would make the system "more progressive". The proposals would also scrap long-standing limits that generally stop councils raising council tax by more than 5% without first holding a local referendum – potentially paving the way for steeper annual bill increases.
Proposals from the All-Party Parliamentary Group
The latest proposals come from the All-Party Parliamentary Group (APPG) on Local Government, chaired by Labour MP Clive Betts and backed by politicians from Labour, the Conservatives and the Liberal Democrats. The group says England should introduce additional council tax bands for the highest-value homes before carrying out a full revaluation of the system. MPs insist the changes would not create a new tax but would instead modernise the existing council tax regime.
The report states: "This change would make council tax more progressive, better reflect contemporary property values, and ensure that those with the greatest housing wealth contribute a fairer share towards local services."
Context of Property Tax Reforms
The intervention comes as owners of homes worth £2 million or more are already due to face Labour's planned "mansion tax" from 2028. Mr Burnham has previously made clear he wants to overhaul council tax, arguing a system still based on property values from 1991 is "not justifiable". He is also understood to be considering lowering the £2 million threshold for the mansion tax to £1.5 million, widening the number of homeowners caught by the levy.
The recommendations also come amid growing pressure for a far wider overhaul of Britain's property taxes. Think tanks, economists and tax reform campaigners have increasingly argued that council tax and stamp duty should eventually be replaced by an annual land value tax, with homeowners paying each year based on the value of the land beneath their property rather than outdated council tax bands or paying stamp duty when they move.
Support and Criticism for Land Value Tax
Supporters argue such a system would be fairer, encourage more efficient use of land and remove the financial penalty that stamp duty creates for people moving home. Critics, however, warn it could leave many homeowners in high-value areas facing substantially higher annual tax bills. Mr Burnham has previously said he has "long been persuaded of the argument" for replacing both council tax and stamp duty with a land value tax, adding to expectations that broader reforms to Britain's property tax system could be considered under a future Labour government.
Referendum Rules Under Fire
The APPG is also calling for ministers to abolish council tax referendum rules, which generally prevent councils increasing bills by more than 5% unless residents approve the rise in a local vote. The group argues the current arrangements no longer make sense after seven councils were allowed to exceed the cap this year without holding referendums.
Labour MP Clive Betts told the Telegraph: "In the end, councils which are elected should be responsible for explaining local tax to local voters. Those voters will decide whether councils behave reasonably for the level of council tax they are levying."
But taxpayer groups warned the proposals would hand councils a licence to keep pushing up bills. John O'Connell, chief executive of the TaxPayers' Alliance, said: "Letting councils hike tax as much as they like and slap new bands on family homes would be little more than a blank cheque for local bureaucrats. Scrapping referendum protections is an obvious cash grab that would let councils dodge accountability while hammering local taxpayers with even higher bills."
Comparisons with Wales and Scotland
The debate comes as other parts of the UK have already moved to increase council tax on expensive properties. Wales has introduced an additional council tax band for the highest-value homes, while Scotland plans to bring in higher bills for properties worth more than £1 million from April 2028. Consultation documents suggest owners of homes valued at more than £2 million could eventually face annual council tax bills of more than £7,500.
Devolution and Future Plans
Mr Burnham has also pledged the "biggest rebalancing of power our country has seen", with greater powers and financial freedoms for councils and regional authorities as part of a wider programme of devolution.
