What might an Andy Burnham premiership mean for the wealthy?

Key takeaways

• Tax pledges and fiscal rules: Andy Burnham is expected to honour existing manifesto promises, keeping income tax, VAT, and national insurance rates steady while sticking to the fiscal rules.
• Property overhaul plans: Council tax bands face being updated to modern property values, alongside a potential new Land Value Tax.
• Wealth taxes review: Higher capital gains tax rates are under consideration, plus replacing inheritance tax with a social care levy.

What might an Andy Burnham premiership mean for the wealthy?

Keir Starmer this morning resigned as Prime Minister of the United Kingdom and in doing so has raised some important questions about future UK policy around wealth. Former Mayor of Manchester Andy Burnham, following his by-election victory in Makerfield, is now expected to replace Keir Starmer in Downing Street, but for the moment at least, nothing is set in stone. Andy Burnham has said he will honour the 2024 Labour Party manifesto commitments, holding firm on income tax, VAT and employee national insurance and also work within the existing fiscal rules.

But beyond that, what might an Andy Burnham premiership mean for the wealthy?

1. Land value tax

Andy Burnham’s opinion is that land in the UK is undertaxed and he is an advocate for reform. He has said publicly that there is an argument for a land value tax and believes that such a reform could mean the reduction or abolition of other taxes, such as stamp duty.

2. Council tax reform

Andy Burnham has been critical of the current council tax system and has argued that it relies on property valuations from the early nineties. He has suggested that there is a strong case for structural reform. This would likely bring council tax bands in line with modern values. This could represent a significant change for owners of higher-value residential property, particularly in areas where values have risen substantially over the past three decades.

3. Capital gains tax alignment

Aligning CGT rates more closely with income tax could also be something Burnham is open to through a review. At his recent campaign launch, he commented on proposals in this area, stating he would want to look at them but would need to examine the detail.

4. Inheritance tax and care Levy

Burnham has indicated his openness to reform around inheritance tax. He has in the past suggested replacing IHT with a ‘care levy’ on estates to contribute to the funding of a National Care Service. He also described the need to fix social care as urgent and said he would not ‘flinch’ from considering the implications for care charges and inheritance tax.

5. Rebalancing earned and ‘unearned’ income

He has suggested he thinks there is an imbalance in the current tax system, with work being overtaxed relative to the taxation of wealth and assets. This suggests a potential continued policy focus on increasing the tax burden on investment income, capital gains and property wealth.

6. Business rates redistribution

Andy Burnham is known to want targeted business rates relief for businesses on the high street, including a 20% cut for music venues, clubs and pubs. He would also like to see the abolition of business rates for lots of independent cafés, hairdressers and shops. These measures could be funded by stronger action against tax evasion and empty high street properties, while also putting higher levies on large warehouses operated by big online retailers.

Treasury help for the wealthy?

The Treasury’s track record of warning ministers against increases in capital gains tax and new wealth taxes could influence a new administration. The Treasury typically cites behavioural responses, administrative complexity, and potential risks to investment and growth. Some believe the UK may already be approaching the point where further tax rises risk decreasing revenues by discouraging economic activity. Therefore, new wealth taxes could well encounter resistance and would probably advance slowly.

Glossary

Land value tax: A levy charged on the unimproved value of land rather than on buildings or property improvements, designed to capture gains from rising land values.

Capital gains tax: Tax paid on the profit made when disposing of an asset that has increased in value.

Council tax: A property-based local tax in the UK levied on residential properties.

Care levy: A proposed charge on estates designed specifically to fund social care services, potentially replacing or supplementing existing inheritance tax.

Fiscal rules: Government-imposed constraints on borrowing and debt levels designed to maintain market confidence and control public finances.