New Prime Minister Andy Burnham is reportedly considering a property tax reform that could save the average household more than £1,000 a year. The proposals would replace council tax and stamp duty with a flat 0.48% annual charge on a home's current value, or a land value tax.
According to reports, Mr Burnham has long pointed to unfairness in the current system, where homes in Manchester pay more council tax than those in London. However, Number 10 has denied that the Government is actively considering such a change.
Potential savings for the average household
HM Land Registry data shows the average property value in England, Scotland, and Wales is £270,000. Under the proposed 0.48% annual tax, that home would incur a charge of £1,296 per year. Currently, the average Band D council tax bill in England is £2,392 a year, meaning a household would save £1,096 annually. Stamp duty, which applies to property purchases above £125,000, would also be abolished under the reported plans.
First-time buyers currently benefit from a stamp duty exemption on properties up to £300,000, with relief ending at £500,000. The new system would remove this tax entirely.
Burnham's previous comments
Speaking to Laura Kuenssberg on the BBC's Panorama programme, Mr 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 reforming council tax to create fairness and that he had been “persuaded” of the argument for reform.
He also noted the need to honour the manifesto on which Labour was elected, saying: “If I were to bring forward any changes, obviously people would rightly say, well, is this consistent with that manifesto? So there are big decisions ahead.”
Support from campaigners and MPs
The Fairer Share Campaign estimates that the flat-rate annual charge could save households in areas such as Hartlepool about £950 a year. Labour MP Jonathan Brash (Hartlepool), chairman of the cross-party group of MPs on council tax reform, told The i Paper that “wholesale reform” was needed. He pointed to Band A homes in Hartlepool paying nearly 2.5 times more than in Westminster, saying: “Council tax is one of the most unfair taxes in Britain, and nowhere is that injustice clearer than in towns like Hartlepool.”
