Keir Starmer’s resignation as Prime Minister has opened the door for Andy Burnham to potentially assume leadership, raising questions about the future direction of tax policy in the United Kingdom. Mr Burnham, a long-time advocate for significant tax reforms during his years in Labour campaigning, has outlined various proposals aimed at reshaping the fiscal landscape, particularly concerning property and income taxes.

One of Mr Burnham’s most notable positions involves overhauling property taxation. During his 2010 Labour leadership bid, he proposed replacing stamp duty with an annual “land tax,” which would be levied based on the value of the land beneath a property rather than the property itself. This system would disregard factors such as property size or the number of bedrooms and would principally impact homeowners rather than tenants.

More recently, he has expressed support for a concept advanced by the campaign group Fairer Share, which suggests replacing both stamp duty and council tax with a single annual charge calculated as 0.48% of a property’s value. According to Fairer Share, this reform could benefit approximately 18 million households in England by reducing their overall tax burden, averaging annual savings of £556. For example, a homeowner with a property valued at £250,000 might pay roughly £1,200 annually—significantly less than the current average council tax for a band D home, which is £2,392.

However, the reform could impose higher costs on owners of more valuable properties, where annual charges might exceed current tax levels. For instance, homes valued around £1.2 million could incur annual charges near £5,760, surpassing the average council tax for the highest band.

Economists and mortgage brokers have noted that scrapping stamp duty could stimulate the housing market by reducing barriers to moving home. Yet skepticism remains over the feasibility of implementing such a system, given the need for comprehensive property revaluations. Current council tax assessments in England rely on valuations from 1991, and updating these figures would be a complex and time-consuming process. Critics also highlight the potential shift in tax liability from tenants to landlords, as council tax—paid by tenants—would be subsumed into the new property levy.

In the realm of income tax, Mr Burnham has previously committed to honouring Labour’s manifesto pledge against increasing income tax, National Insurance, or VAT. Nonetheless, some within his circle advocate reconsidering this stance to support expanded public spending. On the BBC’s Question Time earlier this month, Mr Burnham suggested raising the personal income tax allowance above the current £12,570 threshold, which has been frozen until 2031. This change could benefit millions of workers and pensioners through higher tax-free earnings.

He has also indicated openness to altering tax rates, including reintroducing a 50% top rate of income tax for those earning more than £125,140 annually, reverting from the current 45% top rate. Additionally, he proposed a reduced starting income tax rate of 10% for lower earners, reminiscent of a policy introduced in 1999 but abolished in 2008.

While these proposals remain subject to political debate and the pragmatics of implementation, they signal a potential shift in the UK’s tax system towards more progressive taxation and significant changes in how property and income are taxed. Homeowners and taxpayers may wish to monitor developments closely but should exercise caution in making financial decisions based on proposals yet to be enacted.