Andy Burnham facing pressure to raise council tax on Britain’s most expensive homes – what it means for you
Andy Burnham faces calls to increase council tax on the country’s most valuable homes, while critics have warned it could impose another financial burden on the middle class.
A cross-party group of MPs has called on the new prime minister to introduce new council tax bands for Britain’s most valuable properties, arguing that the current system is outdated and does not reflect decades of changes in house prices.
The all-party parliamentary group on local government (APPG) said the additional bands would make council tax “more progressive” and could act as a first step towards a wider overhaul of the system.
Mr Burnham, who is expected to officially replace Sir Keir Starmer as Labor leader on Friday, has signaled he wants to reform council tax and described the current structure, which is based on 1991 property valuations, as “not justified”.
The proposals come as multi-million pound homeowners are expected to face higher charges from 2028 under a planned “mansion tax” on properties worth £2 million or more. From April 2028 this will bring homeowners extra compensation of at least £2,500 and up to £7,500. But Mr Burnham is understood to be considering lowering the threshold to £1.5 million, potentially bringing many more homes into the new tax bracket.
The APPG report, published on Tuesday, argued that adding more council tax bands would modernize the system ahead of a full revaluation of properties across England.
MPs said the change would not mean creating a new tax, but instead would “modernise the existing one” by ensuring those living in the most valuable properties contribute more.
But critics have warned that adding higher bands would fail to address deeper problems with council tax.
Peter Stimson, mortgage manager at MPowered Mortgages, said the proposal risked increasing bills without solving the underlying problems.
“There’s more to this idea than just a whiff of Spinal Tap,” he said. “Raising council tax to 11 to extract more money from people living in expensive homes may win votes, but it’s not the modernization we need.”
Mr Stimson argued that the current system was “completely outdated” and pointed out that many properties remained in bands based on valuations carried out more than three decades ago.
He said some owners of multi-million pound properties in areas such as Chelsea could end up paying similar council tax bills to households living in much cheaper homes elsewhere, but simply adding new senior groups would not solve the bigger problem.
“Reassessments are needed across the board to make council tax fairer and reflect the changes of the last 35 years,” he said, warning the new bands could trigger a wave of objections from homeowners.
The APPG also called for councils to be given greater freedom to raise council tax without central government restrictions.
Under current rules, councils must hold a referendum if they want to raise council tax above limits set by ministers (generally 5 per cent or 3 per cent for authorities without adult social care responsibilities).
MPs said these restrictions should be removed, arguing that elected councils should be responsible for explaining tax decisions directly to local voters.
Labor MP Clive Betts, who chairs the APPG and supports Mr Burnham’s leadership bid, said greater local powers should come with greater accountability.
“Ultimately, elected councils should be responsible for explaining local tax to local voters,” he told Sky News.
But the proposals have been criticized by campaigners who fear councils could be given too much power to increase bills.
John O’Connell, chief executive of the TaxPayers’ Alliance, said allowing councils to freely raise taxes and introduce new bands would amount to a “blank cheque for local bureaucrats”.
“Scrapping referendum protections is a clear cash grab that will allow councils to evade responsibility while leaving local taxpayers with even higher bills,” he said.
The row comes as Mr Burnham prepares to take over the Labor leadership and consider how to reshape the party’s approach to taxation.
The former Greater Manchester mayor has vowed not to increase income tax, VAT or national insurance, sticking to Labour’s 2024 manifesto. But he suggested there could be changes to business rates, including possible increases for warehouses, to fund tax cuts for pubs and high street businesses.
Mr Burnham has previously supported replacing stamp duty with land value tax (LVT); this tax was an annual fee based on the value of the land rather than the buildings on it.
Supporters argue such a system could create a fairer way of taxing properties, while opponents warn it could leave homeowners in high-value areas, particularly London and the South East, facing significantly higher annual costs.
The future of council tax reform could therefore be an early test of Mr Burnham’s approach to raising revenue as he tries to avoid breaking through on Labor’s tax promises.
