Exploring Andy Burnham’s Tax Reforms and Their Impact on Personal Finances

Andy Burnham's potential move into Downing Street could bring significant tax reforms. Explore his plans for property, income, and inheritance taxes and what they mean for your wallet.

As Keir Starmer steps down as Prime Minister, Andy Burnham is poised to take the reins, potentially as early as July 16. Burnham’s tenure could usher in a wave of tax reforms that have been part of his campaign platform for years.

From property taxes to income tax and inheritance tax these changes could significantly impact personal finances across Britain.

Burnham’s proposals aim to address long-standing issues in the tax system, but they also raise questions about fairness and practicality.

Let’s delve into the details of his tax wish list and what it could mean for you.

Property Tax Overhaul: A New Approach

Andy Burnham has long advocated for a shake-up of Britain’s property tax system. His most notable proposal is the introduction of a land tax which would replace stamp duty with an annual levy based on the value of the land a property is built on.

This tax would be paid by homeowners, not tenants, and would ignore factors like the size of the home or the number of bedrooms.

More recently, Burnham has supported a proposal by the campaign group Fairer Share which suggests replacing stamp duty and council tax with a single annual levy set at 0.48% of the property’s value. This would mean homeowners pay tax each year instead of a lump sum when they buy a home. According to Fairer Share, 18 million households in England would pay less than they currently do, with an average annual saving of £556.

For example, a homeowner with a property worth £250,000 would pay £1,200 per year, which is almost half the average council tax currently paid by a band D home in 2026-27. However, those in more expensive homes could face higher bills. A home worth £1.2 million would incur an annual tax of £5,760, which is higher than the current average for band H homes.

Challenges and Criticisms

The proposed system would require revaluing all homes in Britain, a complex and time-consuming process. The current property values used for council tax bills date back to 1991. Critics argue that implementing this new system would be extremely challenging and could take years to put into effect.

Additionally, the shift in tax burden could impact landlords and tenants differently. Landlords might face higher costs, which could lead to less stock available for tenants and potentially higher rents. Pensioners who are property-rich but cash-poor could also struggle with the higher annual bills.

Income Tax Reforms: Balancing the Scales

During his campaign for the Makerfield seat, Andy Burnham pledged to honour Labour’s manifesto promise not to raise income tax National Insurance, or VAT. However, his allies have already suggested that this promise might need to be revisited to fund his ambitious spending plans. One minister noted that the manifesto was written at a different time and that much has changed since then.

Burnham has previously expressed interest in reforming income tax. He suggested raising the threshold at which you start to pay income tax, known as the personal income tax allowance. This would provide a greater tax-free allowance for millions of workers and pensioners. The current allowance has been frozen until April 2031, which means that pensioners could soon incur an income tax bill on their state pension for the first time.

On the other hand, Burnham has also indicated that he might bring back the 50% top rate of income tax for those earning above £125,140 a year. This could be paired with a lower starting rate of income tax for lower earners, at 10% instead of the current 20%. Such reforms would aim to balance the tax burden more equitably across different income levels.

Inheritance Tax: A Potential Overhaul

Andy Burnham has suggested that inheritance tax could be completely overhauled if he becomes Prime Minister. Under current rules, everyone can pass on £325,000 tax-free, or £500,000 when passing on a family home to direct descendants. Anything above this allowance is taxed at a flat rate of 40%.

Burnham has proposed replacing inheritance tax with a new care levy to help fund the cost of social care. Another option he mooted was replacing inheritance tax with a flat rate of 10% on all estates upon death. This would mean that millions more families would pay inheritance tax, as there would be no tax-free allowance. However, a 10% levy would be more palatable to wealthier families than the current 40% rate.

For example, an estate worth £1 million would pay £100,000 under a 10% flat rate, compared to £270,000 under the current system. While this overhaul would be complicated to implement, it could simplify the tax system and make it more equitable.

Burnham has also indicated that he would ‘look again’ at the recent increase in inheritance tax for farmers. Changes announced in the 2026 Autumn Budget mean that tens of thousands of farms could be liable for inheritance tax for the first time when the current owner dies. Burnham suggested he might revisit these rules if he becomes Prime Minister.

Mortgage Rates: Potential Impacts

A shift in mortgage rates is often one of the most immediate impacts when there is a change in prime minister. Gilt yields, which determine the cost of borrowing for mortgage holders, can be influenced by government borrowing and spending plans. If the bond markets perceive that government borrowing will rise under Andy Burnham, gilt yields could increase, leading to higher mortgage rates.

Burnham has stated that Britain must stop being ‘in hock to bond markets,’ which raised concerns about increasing borrowing without considering the impact on gilt yields. However, he has since taken steps to prove his economic credibility by bringing in top economists to advise him. A loss in confidence among bond traders can have rapid and disastrous consequences, as illustrated by former prime minister Liz Truss’ mini-Budget, where unfunded tax cuts led to a mortgage rate spike.

To mitigate the potential impact on mortgage rates, Burnham has emphasized the need for credible economic policies that balance borrowing and spending. This approach aims to maintain confidence in the government’s ability to manage the economy effectively.

As Andy Burnham prepares to potentially take the reins as Prime Minister, the proposed tax reforms could have significant implications for personal finances. From property taxes to income tax and inheritance tax, these changes aim to address long-standing issues in the tax system. However, the practicality and fairness of these reforms remain subjects of debate. Stay informed and prepared as these potential changes unfold.