Council tax vs a 0.48% property tax: who wins, who loses.

Andy Burnham became Prime Minister this week, and one of the policies he's spoken about most warmly over the years is a wholesale reform of how we tax homes. So it's worth understanding the idea that keeps getting attached to his name — the proportional property tax — because it's suddenly gone from campaign pamphlet to something a sitting PM likes.

I'll say the important bit up front: this is a proposal, not a policy. Nothing has been legislated, there's no start date, and no rate has been confirmed. But it's a serious idea being taken seriously, and it's the kind of thing that would quietly reshape the finances of anyone who owns — or rents — a home. So let's look at it honestly, from both sides.

What's actually being proposed

The specific plan doing the rounds comes from the Fairer Share campaign, and it's the one Burnham has pointed to. In one line: replace council tax and stamp duty with a single annual charge of 0.48% of your property's value.

So a £300,000 home would face £1,440 a year. A £200,000 home, £960. Second homes and overseas-owned properties would pay double — 0.96%. It's collected monthly, like council tax is now, and the campaign says it would also do away with stamp duty (the tax you pay when you buy) and the so-called bedroom tax.

A quick distinction, because the two get muddled: a proportional property tax is charged on the whole property's value. A land value tax — which Burnham has also floated — taxes only the land underneath, not the bricks on top. They're cousins, not twins, and neither has a detailed government plan behind it yet. This piece is about the 0.48% property-value version, because that's the one with actual numbers attached.

Why council tax annoys so many people

To see the appeal, you have to remember how council tax works. Your band — A through H — was set using your home's estimated value on 1 April 1991. Not a typo: 1991. A whole generation of houses has been built, sold, and revalued many times over since, and the bands have never been redone in England or Scotland.

The result is a tax that only loosely tracks what homes are actually worth, and one that leans hardest on cheaper properties. Someone in a modest terraced house can pay a similar amount to someone in a home worth five times as much, because Band H tops out and there's nothing above it. That's the "regressive" charge Burnham and others make, and it's a fair one.

How the two compare

Here's the heart of it. Council tax isn't tied to your current value, so an exact side-by-side is impossible — but that's precisely the point the reformers make. These are illustrative figures to show the shape of it:

You can see the trade instantly. Below roughly £500,000, most people pay less; above it, the bill climbs with the value of the home and doesn't stop. The campaign's own estimate is that around three in four English households would pay less, with the quarter who'd pay more concentrated in London and the South East, where prices are highest.

The whole reform comes down to one number: what your home is actually worth today, not in 1991.

The case for it

Taken on its own terms, the argument is coherent. Bills would finally track real values instead of a 34-year-old snapshot. Most households would pay less. Scrapping stamp duty would remove the tax that gums up the market — the one that quietly punishes people for moving, downsizing, or relocating for work. And a single percentage is a lot easier to understand than a banding system almost nobody can explain.

The case against it

But the objections are just as real, and they deserve equal airtime:

• No ceiling. Council tax caps out at Band H. A percentage doesn't. A valuable home means an open-ended, ever-growing annual bill.
• Asset-rich, cash-poor. Think of a pensioner in a family home that's quietly quadrupled in value. Their income hasn't moved, but their tax would. There's a proposed cap on annual increases and an option to defer, but the tension is real.
• Regional losers. The South of England, where prices are highest, carries most of the extra. That's a hard sell politically, whatever the merits.
• Taxing paper wealth. Your home's value is money you can't spend without selling. A charge on unrealised value is a genuine philosophical shift.

The buy-to-let question nobody has answered

This is the bit that made me want to write the whole piece, because it's where the tidy 0.48% headline falls apart. If you own a buy-to-let — or a few — the proposal raises more questions than it settles:

• Which rate applies? Is a rental a standard home at 0.48%, or an "additional property" at 0.96%, like a second home? Doubling the rate across a portfolio is an enormous difference, and the proposal doesn't clearly say.
• The bill lands on the owner, not the tenant. Today your tenant pays the council tax. Under this, the landlord pays. Faced with a new annual cost, most landlords would look to recover it — which means a "tax cut for households" could partly come back as higher rents.
• No cap, on the whole portfolio. A percentage on the total value of several properties, every year, with no upper limit, could dwarf the council tax those tenants pay now — and might push some landlords to sell up, with knock-on effects for rental supply.
• Cheaper to buy, dearer to hold. Scrapping stamp duty removes the surcharge landlords pay to buy. But the annual charge makes holding more expensive. Whether any given landlord ends up ahead is genuinely unclear.

None of these have answers yet. That's not a criticism of the idea so much as a flag: a headline rate is the easy part. How it treats landlords, second homes and the rental market is where a reform like this lives or dies — and it's exactly the detail that's still missing.

If you're in Scotland, read this bit

Here's something most of the coverage will skate over, and it matters if you're up here with me. Council tax is devolved. The proportional property tax is an England proposal. Even as Prime Minister, Burnham can't impose it on Scotland — that's a decision for Holyrood, not Westminster.

Scotland uses the same creaking 1991 bands, so the same criticism applies, and there's a long-running Scottish debate about replacing council tax too. But it would be a separate political fight, with its own timing and its own answer. So if you own in Scotland: this is a very interesting thing to watch, not something that would land on your doormat because of who's in Number 10.

The honest bottom line

I'm not here to tell you whether this is a good idea — reasonable people land on both sides, and it depends a lot on where you live and what you own. What I'd say is this: the one number that decides which side of it you're on is your home's current value. Not its 1991 band. Not what you paid. What it's worth today.

That's a number worth knowing anyway — for this, for your mortgage, for your net worth, for whether you're actually getting ahead. Reforms like this come and go. Knowing where you stand doesn't.

Frequently asked

This is general information, not financial or tax advice, and describes a proposal that is not government policy. Figures are illustrative and depend on values that change over time. For decisions involving significant sums, please consult a qualified, FCA-regulated adviser or a tax professional.