Key Takeaways
- Stamp duty, a tax paid on property purchases, has long been the subject of criticism and speculation that it will be axed.
- Council tax is also staying, but changes are already in motion after a policy brought in by former Chancellor Rachel Reeves.
- Tax changes are still expected at the Autumn Budget, to be announced by John Healey.
The UK’s new prime minister Andy Burnham has confirmed there are no immediate changes planned to stamp duty or council tax, ending a period of speculation ahead of the Autumn Budget. Before becoming prime minister, he had voiced support for a land value tax in place of stamp duty and council tax.
This is the first time that Burnham has actively ruled out a rumored policy since taking office on July 20. Since entering Downing Street last week, he has announced a VAT cut on energy bills, promised reforms to social care funding, cut business rates for pubs, promised to end rough sleeping, and pledged to reorientate the UK’s politics away from London to Manchester.
Stamp duty, a key property tax, has long been the subject of criticism from tax experts to politicians. The tax itself has been tweaked under various chancellors, including temporary “holidays” during covid and changes to bands to improve the prospects of first-time buyers. No policymaker has taken the axe to the levy altogether, a move that would save homebuyers thousands of pounds but cost the UK government nearly £10 billion in lost revenue.
The new chancellor, John Healey, has yet to announce any changes to UK taxes or government spending, but is expected to do so in the Autumn Budget, whose date has yet to be announced.
Rachel Reeves Set Council Tax Changes in Motion
Council tax, which is levied by local authorities on those who own or rent their homes to pay for services, has also been criticized by Burnham in recent days for creating regional disparities.
“There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London,” he told the BBC.
But changes to the system are already in place after Rachel Reeves, who has left her role as chancellor as part of the summer reshuffle of the cabinet, initiated changes to council tax that were targeted at those owning expensive properties. The “high-value council tax surcharge” is coming into effect in 2028, which will affect those owning homes than £2 million and £5 million.
Andy Burnham recently said this policy change is “right and fair.”
What Are Stamp Duty and Council Tax?
Stamp duty land tax is paid by those buying properties, based on the property’s value. The bands are:
- Up to £125,000: no tax due.
- From £125,000 to £250,000: 2%
- From £250,001 to £925,000: 5%
- From £925,001 to £1.5 million: 10%
- Above £1.5 million: 12%
Stamp duty rates are higher for purchases of second homes. First-time buyers pay no tax on purchases up to £300,000, then 5% on properties between £300,000 and £500,000. Other reliefs are available.
Those who rent or own property also pay council tax, which is based on the value of the property at 1991 levels. This is set locally and pays for services like refuse collection and street cleaning. Critics say this takes a higher proportion of money from lower-income families than higher-income ones. It also ignores the significant uplift in house prices that has occurred over the last 35 years, particularly in the South of England.
