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

Update — 24 August 2026. Since I first published this, the picture has moved on — so I've added the new bits rather than pretend I wrote it this way all along. The short version: the 0.48% proportional property tax below is still just a proposal. But while everyone's been debating it, the government has quietly been getting on with something narrower — a "mansion tax" on the priciest homes — and Scotland has now confirmed its own version that will land on high-value homes up here. The newest bit, from late August: HMRC has started sending valuers round to homes near the £2m line to work out who's actually caught. I've woven the confirmed changes into the sections below — look for the dated notes.

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.

What's actually been legislated (and it's narrower than this)

Here's the thing worth holding in your head alongside all of the above: the tidy 0.48% reform is the big idea, but the concrete thing the government has actually committed to is much narrower.

It's a High Value Council Tax Surcharge, quickly nicknamed the "mansion tax." Announced in the 2025 Budget, it adds an extra annual charge on homes in England worth £2 million or more — starting at around £2,500 and rising to roughly £7,500 a year for the priciest properties — with collection due from April 2028 and a consultation that closed in mid-July 2026. It's England only, the money goes to the Treasury rather than your local council, and it sits on top of council tax rather than replacing it.

So the picture is: the wholesale 0.48% reform remains a proposal, while the actual, funded policy heading for a Finance Bill is a targeted top-slice on expensive homes. Two very different things wearing similar language.

There's also fresh speculation (reported in July 2026) that Burnham could lower that £2m threshold to £1.5 million, which would pull in perhaps 150,000 more homes, again concentrated in London and the South East. That's speculation, not policy — but it tells you the direction of travel is "tax expensive homes a bit more," not "rip up council tax for everyone."

Update — 24 August 2026. The mansion tax just got real in a way you can feel: HMRC is sending valuers round. To work out whose home actually crosses that £2m line, they've started arranging visits to properties near the mark — by appointment, so nobody's turning up unannounced — ahead of the surcharge landing in April 2028. It's worth knowing the teeth on it: block a visit and it's a £200 fine; don't hand over the details they ask for and it can climb to £500. On the numbers, Zoopla reckons about 183,000 homes are already over £2m, with another 75,000 sitting just below — and that second group is the one to watch, because a rising market or a valuer's eye could tip them over the line into a bill of roughly £2,500 to £7,500 a year they didn't have before. Still England only, still on top of council tax, still 2028 — but the machinery to decide who pays is now switched on.

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.

Everything here turns on one figure: what your home is worth today, not in 1991. WealthR tracks exactly that — and your whole net worth — free, no bank linking →

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.

One confirmed change worth knowing (July 2026). Separate from all of the above, the government has confirmed an increase to income tax on property income in England from April 2027 — the rates landlords pay on rental profits rise by two percentage points across the board (20% becomes 22%, 40% becomes 42%, 45% becomes 47%). It applies to individual landlords, not those holding through a limited company, and Scotland has said it won't apply it. That's not the proportional property tax — but if you're a landlord modelling your future costs, it's a real, dated change, unlike the 0.48% headline, which is still hypothetical.

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.

And here's what's changed since I first wrote this — and unlike the England proposal, it's confirmed. In the Scottish Budget on 13 January 2026, Finance Secretary Shona Robison announced two new council-tax bands for homes worth over £1 million, due to take effect by April 2028 — Holyrood's own answer to the "mansion tax" question. A consultation on the actual rates opened in early July 2026, so the exact numbers aren't final yet, but the direction is set. LBTT (our version of stamp duty) was left unchanged, and Scotland has said it won't follow Westminster's planned income-tax rise on landlords.

So the picture up here is: no wholesale proportional property tax on the table, but a real, confirmed top-slice on £1m-plus homes coming down the track — on a lower threshold than England's £2m. If that could be you, it's worth watching the rate consultation closely, because that's where the size of the bill gets decided.

What the 28 October Budget could actually change

The Budget lands on 28 October 2026, so it's fair to ask whether any of this is about to happen.

Short answer: almost certainly not. The 0.48% plan is a campaign's idea, not a government one. Nobody has consulted on it, nobody has drafted it, and replacing council tax outright would mean revaluing every home in England — a job no Chancellor has volunteered for since 1991, which is rather the point of this whole article.

What's already on the books is narrower, and narrower is usually how property tax actually changes:

• The surcharge on £2m homes. Announced in the November 2025 Budget. It sits on top of council tax rather than replacing it — the mansion tax by another name.
• Scotland's £1m bands. Confirmed at Holyrood, due by April 2028, with the rates still out for consultation.
• Landlords, from April 2027. Two percentage points on rental profit for individual landlords in England.

None of that is the reform described in this article. All of it is real.

For the 28th, the things worth watching are the boring ones:

• Whether the £2m threshold moves. Round numbers rarely stay put. Drop it to £1.5m and the number of homes caught changes sharply.
• Whether revaluation gets mentioned at all. It's the load-bearing wall under every version of property tax reform. If a Chancellor says the word out loud, something bigger is coming.
• What happens to everything else you own. Property rarely moves on its own. There's persistent talk about capital gains and the tax-free pension lump sum, and either would touch far more people than a mansion tax ever will.

I keep a running note of it on the Autumn Budget 2026 page — what's confirmed, what's still only on the table, and what looks unlikely to shift. It gets updated as things firm up, and on the day itself.

One prediction I'm comfortable making: most of what you read between now and the 28th won't happen. Budget season produces a lot of confident writing about measures that quietly never turn up.

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, and as the last couple of weeks have shown, the detail can shift faster than you'd think. 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.