Reform Property Tax

There is much talk about the challenges Rachel Reeves is having in balancing the books on a low growth economy like the UK.

Having been elected on a manifesto pledge not to raise taxes on working people (I think this was broken last year!) she faces a large black hole (bigger than the one she inherited!) in the UK books.

There is much talk about a wealth tax on people with over £10m in assets (how you define this is pretty tricky) but most people in the UK live in a property which is generally much easier to value. So I am in favour on a wholesale reform of property tax to allow larger properties (or higher value ones) to be taxed at a higher rate than lower value ones.

From ChatGPT:

In the UK, property tax typically refers to Council Tax, and sometimes Stamp Duty Land Tax (SDLT) when purchasing property. Here’s how the tax burden differs between average and high-end properties:

🔹 1. Council Tax (Ongoing Annual Tax)

Council Tax is based on property value bands (in England, from A to H) assessed as of April 1991 — not the current market value. The system is not progressive and caps out at Band H. This creates a regressive effect: high-value homes often pay a lower effective rate compared to average or lower-value homes.

Average UK property price (as of 2024): ~£286,000
- Likely falls in Band D or E (annual tax: ~£2,000–£2,600 depending on local council).
Luxury property (£5 million+): Also likely in Band H
- Max Council Tax: ~£3,000–£4,500 annually (again, varies by location).

➡️ Council Tax differential:
Someone with a £5 million property might pay only ~2× as much as someone in a £286k home — despite the property being worth 17× more.

This shows how the UK’s Council Tax system disproportionately benefits the wealthy.

Not only would this encourage older people who live in larger homes to down size it would also help with the “tax the rich” argument – as most people who are “rich” live in more expensive properties. The downside is that the UK Is heavily invested in the property asset class and this is likely to hit more people who are core voters than the current government would like.

But personally I like the idea – 1991 was a long time ago to have a property based system tax system reviewed