The government is considering replacing council tax and stamp duty with a new 0.48% tax on homes, it has been reported. It comes after former Housing Secretary Steve Reed confirmed that the Labour Party is looking at alternative options to council tax and stamp duty.
Andy Burnham officially became the UK’s new Prime Minister on Monday, July 20, 2026 and has already made a series of pledges surrounding the taxes Brits pay, including cutting business tax for pubs, clubs and music venues, and a VAT cut from electricity bills. Now the government appears to be looking to reform how properties are taxed.
According to The i Paper, there are two options that are being considered: a proportional property tax, which would replace council tax and stamp duty with a 0.48% annual charge on a property’s current value, or a land value tax, made up of an annual charge based on the value of the land a property sits on, rather than the building.
The Prime Minister has said that he has “long been persuaded of the argument” to change the system. Mr Burnham described council tax as “highly regressive”, noting that he has repeatedly called for changes to the system.
More than 100 MPs are calling for the system to be completely overhauled, it is reported. The demand comes from members of the Labour MPs for Council Tax Reform caucus, the Red Wall group of more than 40 MPs, and the All-Party Parliamentary Group (APPG) on Council Tax Reform.
Mr Burnham was handed a policy document detailing the case for the council tax reform in his first days in No. 10, it is believed.
Hartlepool MP and chair of APPG Jonathan Brash slammed council tax as “one of the most unfair taxes in Britain”, claiming that “injustice” is clear in towns like Hartlepool, where a comparable property in Wandsworth would pay £1,020 a year, whilst the cost in Hartlepool would be £2,556.
Stamp duty is currently paid by homebuyers on purchases over £125,000, with it increasing to £300,000 for first-time buyers.
Should a reform actually take place, it is likely to take some time. Lord Blunkett claimed that a land value tax would be “politically problematic”, adding that “radical thinking in economics” is necessary ahead of any considerations.