Council tax and stamp duty face 0.48% property tax replacement

The news

The government is considering replacing council tax and stamp duty with a new 0.48% tax on homes. Former Housing Secretary Steve Reed confirmed that the Labour Party is looking at alternative options to council tax and stamp duty. According to The i Paper, two options are under consideration: a proportional property tax, which would replace both with a 0.48 per cent annual charge on a property's current value, or a land value tax based on land value alone. Former Greater Manchester Mayor Andy Burnham has previously supported a proportional property tax advocated by the Fairer Share campaign. Downing Street denied that the proportional property tax was being actively considered by the new Government.

What's at stake

Council tax in England relies on 1991 property valuations and varies widely by local authority. Stamp duty is currently paid by homebuyers on purchases over £125,000, with it increasing to £300,000 for first-time buyers. The proposed proportional property tax would replace both with a flat 0.48 per cent annual charge on a home’s current value. It aims to raise similar total revenue but spread more evenly. The capital would be the only area in the country which would end up paying more under the new system, adding an extra £7.5 billion bill for London according to analysis in the Evening Standard. Homes worth £600,000 would face an extra £800 on their property tax bill.

The case for

A proportional property tax creates a fairer, more up-to-date system. It would lower bills for 77% of households while removing stamp duty barriers to moving. Scrapping stamp duty would mean spreading that one-off cost across an annual charge instead. The system would charge 0.48% of the value of a property, rising to 0.96% for empty homes, second homes and those owned by foreign nationals. This approach would align taxation with current property values rather than outdated 1991 valuations.

The case against

The new tax risks future rate rises once in place. It would hit pensioners and fixed-income owners hardest through annual charges based on full current values. The change could reduce property values through capitalisation of the higher ongoing tax burden. London would face an additional £7.5 billion property tax bill overall. The proposal would unfairly penalise the capital according to critics cited in the Evening Standard.

Why it matters now

If the proportional property tax is adopted, most households under £350,000 would see lower bills but higher-value properties would pay more. A land value tax alternative remains under discussion but Lord Blunkett claimed it would be politically problematic. Any reform is likely to take some time. The next political milestone will be further clarification from the government on whether these options advance beyond initial consideration.

Further reading

inews.co.uk · standard.co.uk

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