Downing Street has moved to quash speculation that Prime Minister Andy Burnham is actively exploring options to overhaul the UK's property taxation system. Reports had suggested the government was looking at replacing council tax and stamp duty with alternatives such as a proportional property tax or a land value tax, but Number 10 has firmly denied these claims.
A spokesperson for the Prime Minister told MoneyWeek that rumours of Burnham considering such changes were “not true,” adding that decisions on tax matters are the Chancellor’s prerogative to announce at fiscal events. This statement aims to draw a line under recent reports, particularly from The i Paper, which had indicated that discussions were underway within government circles regarding these significant reforms.
The speculation arose amid Prime Minister Burnham's longstanding criticism of the existing council tax structure. In a BBC interview on 26 July 2026, he reiterated his view that the current system is inherently unfair, highlighting instances where households in areas like Manchester pay higher council tax than those in significantly more valuable properties in affluent London boroughs such as Westminster. He referenced former Labour Chancellor Rachel Reeves' past efforts to reform council tax to address these imbalances, particularly concerning the lack of revaluation of property bands over the years.
One of the rumoured proposals, a proportional property tax, would involve an annual charge based on a home's current market value, with a figure of 0.48% having been suggested, though this has also been dismissed by Number 10. Such a system could drastically alter the financial landscape for millions of UK households. For example, a property in the North East, with an average value of £181,133 in June (Lloyds data), would incur an annual tax of approximately £869. This is significantly less than the current Band D council tax rate of £2,540 in Newcastle. Conversely, an average London home, valued at £534,831, could face a charge of £2,567 annually, exceeding the current Band D rates in all London boroughs, including Kingston upon Thames (£2,050) and Westminster (£935), despite Westminster properties having an average value of £836,000 (ONS data).
The other alternative reportedly under consideration was a land value tax (LVT). This tax would be levied on the value of the land a property occupies, rather than the property itself. Proponents argue this would mean properties in remote areas would pay less, while those in prime urban locations, particularly near major cities, would likely pay considerably more, regardless of the size or type of dwelling. Research by Tax Policy Associates suggests that such a shift would see most households outside of major urban centres paying less tax, with those in close proximity to large cities generally facing higher bills. While Number 10 has denied active consideration of these proposals, the underlying debate about the fairness and efficiency of the UK's property tax system is likely to persist.