Burnham: The Raid on Middle England's Personal Wealth
‘Middle England’ is worried…and so it should be....
In his new role as our PM, Burnham has, in his own words, ‘hit the ground running’ in his project to 'Manchesterise' Britain (or at least the non-devolved English part of it). He is looking hard for new revenue-generating targets to fund his many and varied 'projects' to avoid spooking the markets with a lot of extra borrowing.
His left-leaning socialist ideology naturally points him towards across-the-board redistribution of the UK's wealth, and he represents a return to more traditional Labour aspirations from the Starmer 'aberration' as the hard-left Momentum group would view it.
Since most of the UK’s private money and assets are held by so-called 'Middle England', Burnham sees this large, disparate and normally compliant group of electors (particularly those over 50), as a potential soft-touch....and they are therefore firmly in his sights as a potential cash-cow.
One of the problems the new UK PM faces, however, is that he is severely constrained, as was his illustrious predecessor, by the wording of Labour’s 2024 manifesto. Starmer designed this 'statement of intent' specifically to make Labour seem fiscally 'safe' enough to get him, and the party, back into power. In the event, he managed to tap successfully into the virtually universal dissatisfaction with Sunak's distinctly 'unconservative' brand of Toryism to win what was a ridiculously large number of seats for their share of the votes cast. To do its job of 'pulling the political wool', the manifesto needed to include firm promises of stable tax rates to convince the electorate that Labour had finally thrown off Corbynism and returned to the economic fold.
Burnham knows that without going to the country for a separate mandate of his own, he is obliged to stick to Manifesto '24's terms or face serious accusations of breach of promise to the electors. And he certainly doesn't want to cut his premiership short by giving us any opportunity at all to make sure that happens before 2029......
He can’t therefore raise any of the main existing tax rates applicable to income without a manifesto breach (despite Labour's assertion to the contrary, they have indeed already broken manifesto promises on Tax. Reeves in her final budge did raise the headline rates for Savings, Rental and Dividend income; this was clearly contrary to the wording of the manifesto commitments (see p 21), since these 3 categories are all universally classed as 'income').
Tax thresholds, which weren't specifically mentioned in the manifesto embargo; these have been deep-frozen since Sunak's 2021 decision as chancellor, and actually reducing them even further would cause an outcry, given the number of workers already dragged into the 40% tax band by what is widely regarded as a 'stealth' tax. Capital Gains Tax (CGT) was one existing tax not included in the manifesto, and is therefore also expected to be a prime target in the coming fund-raising campaign.
Burnham also has another and potentially more serious problem: 400+ independently-minded back benchers, who already have a taste for power, and are not afraid to wield it.
Many of these new and still rather naive MPs are acutely conscious of the risk
that they will lose their seats in 2029 (May '29, the most likely date for the next general election, is well under 3 years away now). Their inherent 'twitchiness' is because many of the new 2024 intake were elected as a
direct result of the 'great anti-Tory putsch of '24'. Their seats are therefore at significant risk of
changing hands next time round, particularly if Labour’s unpopularity as a
party under Starmer is maintained, or (perhaps more likely despite Burnham's current charm offensive) actually worsens over the next 2 years. They will already have had direct and unhappy experience of what happens to their mailboxes if you take away a benefit (i.e.WFP) from pensioners who rely on it, and they won't risk their seats by allowing anything of that sort again.
One other important difference for Burnham stemming from this is that the back-benchers have already 'tasted blood' by preventing Starmer from making significant inroads into the benefits bill, and forcing his screeching u-turn on WFP eligibility. Burnham is likely to hit the same sort of brick wall if he tries anything similar himself with his newly-empowered back-benchers.
Yet another management problem he has already created for himself is that he has, rather unwisely, also managed to sweep the Starmer loyalist ‘old guard’ away wholesale in his initial large-scale reshuffle without much attempt at consultation or compensation. The MPs concerned are still in parliament, however, and this has therefore created an additional ‘axis of resistance’ on the back-benches which is likely to form the nucleus of any future rebellions.
This rather naïve early strategic error on
his part, although perhaps not as catastrophic as Starmer’s WFP debacle 5 days into his premiership, may yet
come back to haunt him when it comes to trying to force through the many and undoubtedly controversial initiatives we're now hearing about. All of which suggests that a super-majority in parliament is not always a good outcome for the unfortunate leader who inherits it....
Burnham also knows 'the Markets' will not tolerate much, if any, non-essential additional borrowing; any that his new Chancellor does sanction must be properly vetted by the OBR, who will no doubt already have told him "...Sorry, Andy, the UK's credit card's maxed out just now - you can’t borrow any more until it's paid off without spooking the Markets...".
Thus, apart from trying to wring a few more pennies out of the budgets of his already struggling Whitehall departments, and alienating his civil servants in the process even more than Starmer did, his only option for funding the many diverse
(and expensive!) projects he has on his personal burgeoning 'to do' list is to invent new taxes to provide the extra revenue which aren't subject to the manifesto embargo.
As we've discussed, these will undoubtedly all be designed to hit ‘Middle England’ hardest, given that’s where most of the personal wealth resides. As we’ll see when we take a look at the financial ‘nuts and bolts’ of the proposals (in as far as we already know them), anyone with any Savings or Property or other qualifying assets will be affected, not just the ‘well-off’ (whoever they are nowadays !).
As we've already discussed, ‘Middle England’ is by its nature a more
diffuse grouping than the pensioners, and therefore more difficult to define precisely. It is, however, arguably even more important
electorally, forming perhaps 40% of the voting electorate. Thus Burnham will
need to tread very carefully when trying to extract cash from its members wholesale. Starmer's only attempt at defining his 'challenged middle' was to describe them as anyone other than the group he regarded as workers (i.e. anyone earning more than £45k p.a). This definition in terms of income alone misses a swathe of people with incomes significantly lower than £45k, but who possess higher value assets. Anyone in SE England, for example, owning even a modest house but with little savings would be hit hard by wealth- or land-based taxation if it were introduced. We'll see why this is important later.
Burnham himself is currently on a rare ‘popularity bounce’ (as was Starmer immediately after his election victory), having appeared from on high (i.e. Manchester) as the ‘Labour Messiah’ and already spread some early sweeteners in the form of £45 VAT reduction on average electricity bills (for one year only, please note!) a £1 reduction in the bus fare cap (from January), and a small (and temporary) reduction in business rates for pubs.
Small beer indeed you might say...and you'd be right.
The honeymoon will soon be over for him and his party, I fear, once it becomes clear just how much he intends to take away from the majority of us during his tenure.
It’s no coincidence that Burnham has already flatly refused to call a general election before 2029 to establish his personal mandate – he knows full well that Labour would probably be beaten soundly, despite his own fleeting personal popularity, even if an election were held as soon as possible i.e. in early October. Any later, and a Labour defeat would be virtually guaranteed, once the financial implications of his reforms for all of us had been announced at the October budget and had time to sink in.
The 'flurry' of worrisome announcements immediately before parliament went into recess may, of course, have been a deliberate psychological ploy (i.e. to put forward the worse case scenarios to 'frighten the horses', then induce relief by backtracking to more palatable ones after the summer dust has settled). It could also have been an attempt to browbeat any 'unruly' back-benchers into submission by throwing everything into the parliamentary 'pot' at once, just at the end of the parliamentary term when they're all returning to their constituencies for a welcome break from the Westminster turmoil. However such 'clever' ploys can and do backfire if the public and the media cotton on, and the back-benchers may decide to take him to task. We shall see in September, when the summer holidays and their heatwaves are over and parliament resumes....
On reflection, it’s a shame our electoral system doesn’t actually require any new party leader who takes over as PM to seek their own mandate from the electorate. More to the point, I believe we, as electors, should also have more interim opportunities to influence policy directly - once every 5 years isn't really sufficient, particularly in times of rapid change. Perhaps addressing this deficiency should be the first priority of a new 2029 administration....?
New Taxes Proposed
The first thing to note is that the following proposed additional taxes only apply to England, since the other three home nations are devolved where such matters are concerned and already make their own arrangements on tax. Here’s what has been put forward for English taxpayers so far:
1) Property Land Tax to replace Council Tax and Stamp Duty:
Burnham has already indicated he wants a complete revamp of the Council Tax system, with an emphasis on the value of land, rather than the type of housing built on it, or indeed who lives there. He also believes that the current system is too much of a postcode lottery, given that our Local Authorities (LAs) determine council tax rates in their own areas, and these do vary considerably. A flat rate charge of 0.48% of property value p.a. across the UK has already been mooted - presumably the new tax variant would still be administered by the LAs, given Burnham’s stated preference for more, not less, devolution to the English regions.
Before this tax could be introduced, property valuations would need to be revised upwards from current (i.e.1991) values. This would be necessary to make this tax economically viable as a council tax replacement. Band C properties in England, for example, had valuations between £52k and £68k in 1991, equivalent to £137k-£179k in 2025. The average UK house price (excluding London) is now well north of £250k, thus we should expect significantly higher valuations to be imposed across the board.
One benefit of the change, to first time buyers in particular, is that Stamp Duty would be abolished to help resuscitate the housing market, which is currently in the doldrums. The new Land Tax would undoubtedly hit home owners in the South East hardest, where few properties now weigh in at lower than £1M (i.e. equivalent to a bill of at least £4800 p.a.). Even a more modest new-build valued at £400k in the less expensive parts of the UK would cost its owner £2000 p.a. at this level. Presumably the current 25% single person discount would also disappear, since the tax would be determined by the land's value, not the nature of its ownership. Pensioners and other householders living alone beware - you may well have to start paying well over the odds for your solitude (voluntary or otherwise) if this tax is enacted!
2) Social Care Levy on Estates at Death (already dubbed the "Death Tax"):
This new tax would be introduced specifically to fund the re-vamp
of the UK Social Care system, which is now acknowledged by all the major political parties to be broken. Funding better Social Care is one of Burnham’s top
priorities, largely because of his own family experiences with the existing
system. It's not the first time this was proposed - notably, Theresa May proposed a similar arrangement....(and look what happened to her!).
A figure of 10%, applied as a one-off ‘Death Tax’ levy on all estates based on their valuation before probate is granted, has been mooted.
The rationale quoted for this new tax is that all of us are liable to need care at some point in our final years, and this needs to be free at the point of need during our lifetimes, as per the rest of the NHS, with the cost coming out of our estates on death.
This levy would ultimately hit everyone, but would not involve any payment by an individual before their death. It would also, I suspect, be an even more hated tax than IHT, which is widely regarded as unfair 'double-taxation' of a person's earnings, especially by those families standing to inherit what's left of their parents' wealth, and relying on this expectation to go on making ends meet.
A death tax on estates of this sort is also considered particularly unfair for the current 'boomer' generation now in their 70s and 80s; this is because they have already paid into the system in the form of income taxes and compulsory NI contributions throughout their working lifetimes. This pay-in to the UK health system as it was then constituted was earmarked specifically as part of Bevan's NHS introduction in 1947 to qualify them for free healthcare, as well as a modest pension post-retirement payable over their remaining lifetime. Conveniently 'forgetting' this effective contractual promise by Government on the grounds of cash shortage is not morally justifiable. Due to the failings of our current adult social care system, such individuals may well also have paid substantial amounts for care they have already received under the current means-tested regime, so arguably would end up subsidising those still to come without getting value for money themselves if they were made liable for the full death tax premium on their estates.
As often occurs in the case of IHT for those over the current threshold, the application of this new tax by HMRC could also lead to considerable additional post-bereavement trauma for immediate relatives of a deceased's estate where there is little cash residue. This would be particularly likely in areas where house values are high, such as London and the South East. The trauma arises because HMRC under the current IHT system insist on immediate payment on death of all tax due on an estate without waiting for probate. This often forces a quick disposal of assets other than the property by the relatives at a loss to meet the tax debt, and hits them at a time when they are likely to be still grieving. It can even force them to liquidate their own assets if probate is delayed. One of the more despicable and inhumane aspects of our tax system, to say the least…
Revision of IHT rates, widening of scope:
Although it’s unlikely that IHT would still be applicable on top of this new tax charge, it’s possible that it might be if Burnham and Healey get desperate enough for the additional funding to 'balance the books'. A more likely alternative suggested is the possibility of raising the headline IHT rate from 40% to 50%, while maintaining current (frozen) £325k threshold – the problem there for the exchequer, though, is that not everyone would be contributing, as they would with a flat-rate 10% levy without a threshold. This would therefore raise a lot less extra revenue, and could also be called out as unfair by placing the whole extra burden of funding care on a relatively small group of more prudent wealth accumulators. A halfway house with a lower threshold, might be one way of increasing the tax take.
IHT has already extended its range to pensions - unused pensions used to be tax-exempt provided the recipient died before age 75; Reeves' last budget abolished this exemption, so it's now a case of 'use it, or lose (a large chunk of) it'. I suspect it will only be a matter of time before the spouse to spouse transfer IHT exemption also goes...now that really would 'set the cat among the pigeons', and would turn out to be virtual political suicide for anyone who tried it. Surely even Labour wouldn't be that idiotic!
More recently, an alternative levy for social care, this time on workers’ salaries, has been suggested. This would certainly be a fairer way of funding any future care provision for those still of working age, and is probably Burham's only chance of getting general buy-in, which he still seems keen to do. I have already looked at possible alternative funding models for funding the NHS as an integrated system with Social Care along the lines used by our European neighbours; their systems are all based on contributions made during one's working lifetime.
It should also be remembered that today’s retirees have only had access to the older and highly restrictive means-tested system throughout their lives, therefore won’t ever be able to get the full benefit of any improved social care system before they die. Although most of us are only likely to need personal and/or residential care during our final years, some who are in poor general health may need it much earlier in their lifetimes, whereas others may not need any at all if they die early, or remain healthier than the average until their deaths.
The levy on salaries proposed would be applied at 1.8% of pre-tax earnings above £6240, and would therefore hit everyone in full-time work, given the current full-time minimum wage amounts to ca £22k. The total extra tax take on an 'average' £35k salary would be £518 p.a.
3) New Wealth Tax:
This suggestion has been around for a while, and is put forward regularly by other parties, most notably the Lib Dems, but has never been acted upon...for good reasons I'll discuss shortly.
There are no exact estimates yet on the headline rate p.a. or the thresholds that might be applied. Earlier suggestions of a £5M threshold with 1% p.a. tax take on anything above that seem to have morphed into a tax with a much higher cut-off and the tax now would be essentially for the super-rich only (i.e. 2% on assets >£100M), but of course the threshold could be lower.
Recent reports suggest that Burnham is wary of trying to introduce even this pared-down version, given the practical difficulty of establishing annual checks on individuals’ wealth and the resource that would be required to implement this.
For a start, it's likely that anyone wealthy enough to lose substantially by it would be able to find clever ways round the tax and might even decide just to leave the UK, taking their not inconsiderable wealth (and therefore HMRC's income tax take!) with them… the total revenue from the new tax could well be outweighed by the income tax revenue lost if substantial numbers of the 'super rich' did decide to leave and go 'non-dom'.
Quite apart from anything else, HMRC would literally be swamped by the checking process at a time when they are seriously under-resourced with all the other new taxes Labour has come up with since 2024. If the threshold were pitched much lower, Burnham would have the added burden of a virtually universal objection to the state delving deeply into every electors' personal asset values, which would almost guarantee a heavy electoral loss in 2029.
Capital Gains:
Although this is certainly not a 'new' tax, it is likely to be a prime target of Burnham's 'cash cow' initiatives (as some are already calling them). The most likely change is equalisation of the rates with income tax rates. This would make a big difference to anyone whose income is dependent on share sales & dividend income, and /or property sales. Current CGT rates are still quite generous at 18%-24% depending on one's income tax banding. Equalising rates would presumably mean simply adding total capital gains to the income total for the year and assessing on that basis using current income tax thresholds and rates. It would have the advantage of minimal additional resource demand for HMRC, and affect relatively small numbers. As in the case of a wealth tax, though, the down side is that it would be likely to 'frighten away' wealthy UK residents and potential investors alike, to the detriment of our national wealth as a whole.
An even more insidious potential threat to personal wealth emerged recently - retrospective charging for lifetime total capital gains on all remaining assets at death. Although the details of this chilling possibility have not yet emerged, the implications for families of deceased are potentially dire. This measure in its simplest form would require CGT (presumably now increased to 40% for a higher rate taxpayer) to be charged on the difference between the purchase value of an asset and its market value at the time of death, and this would apply to all assets. The CGT charge on an 'average' property alone (value now ca £250k) which might well have been purchased back in the 70s for, say, £50k would work out at 40% of £200k i.e.£80k. Not something a grieving family would want heaped on their shoulders on top of IHT, particularly as HMRC would inevitably chase them for immediate payment. I suspect this suggestion was intended as a 'frightener'...the administrative burden alone in implementing it makes it highly unlikely.
How can I assess the effects of all these potential new taxes on my own finances ?
Relatively easily - if you have a Windows pc with Windows 7 or later and MS Office 2010 or later installed, you can download Tax Sheet.xlsm from my website. You'll find calculators for all of the proposed new taxes on worksheet 'New' with the currently quoted estimates of rates, thresholds, etc. You can also model your current tax position using the calculators for existing Income Taxes, CGT and NI to give you an idea of your tax liabilities for FY 26-27 and beyond.
When might all this be likely to happen ?
This all-important question is not the easiest to answer, but we can make some 'educated guesses'. It's likely that at least some major announcements will be made in the October budget, and the PM will be attempting to set the scene in the coming weeks starting with his 'Cost of Living' tour in August (presumably neither TicketMaster or the 'Swifties' will be involved!).
As far as implementation goes, the easiest (and therefore potentially quickest) change to implement would be an upgrade to the current IHT system (ca 10%) to provide an additional infusion of social care funding. The system for this is already in place and no additional legislation would be required.
Theoretically it could be introduced by Healey in his October budget, but it would probably be deferred until the start of FY27-8 to allow the HMRC system to be adapted. The alternative death tax option, applicable to all without a value threshold, would take somewhat longer to implement, given the much larger number of estates that would be 'caught' in the IHT net. It would, as discussed, also be much more controversial.
A lot of extra assessment resource at HMRC and elsewhere would be required just to implement verification successfully. Conservatively, full implementation in FY 28-29 might be realistic, but such timing would be politically dangerous since the election would likely be held immediately after the end of the first full year, with the reality hitting home to grieving beneficiaries just before an election. More likely it would be postponed to the 2029-30 session (i.e. the start of Labour's second term...if it ever gets one).
A council tax replacement in the form of a Land Value Tax, by contrast, would be quite an undertaking, to say the least. The LAs would need to devote a lot of resources to the project, for which they would require extra funding approved and be able to source the additional workers to do it. The whole of the English property 'estate' would also need to undergo a re-valuation. Remember that Labour have just confirmed they will be taking an axe to all the English District and Borough councils in April '28, and the resulting chaos won't do much to help with this mammoth task. The last full valuation was carried out in 1991, when the mid-band (C) was assigned a valuation range £52-£68k - peanuts in terms of 2026 actual values, and thus not much of a revenue-earner for the treasury if rateable values were left as they stand. This one is unlikely to see the light of day until FY28-29 at the earliest, and possibly another one for Labour's next term (if indeed it ever gets one!).
A Wealth Tax, on any but the super-rich, would be the real implementation nightmare for HMRC, given everyone's total wealth would need to be assessed and independently verified. And this would need to happen not just once, but every tax year. As already indicated, I suspect that, given the relatively small demographic likely to be affected, and its unpopularity, this tax will probably never see the light of day - if it does, it won't be until the next parliamentary session.
References
Some useful recent background articles: https://www.londonbusinessmag.co.uk/andy-burnham-inheritance-tax-plan/
Workers Levy: https://www.telegraph.co.uk/politics/2026/07/28/workers-face-new-tax-to-fund-social-care/
Final Thoughts:
Firstly, please note that, as discussed, none of the new measures discussed above have been
enacted into UK law as yet. They would also only be likely to apply to England, since the other home nations are devolved and make their own arrangements for funding Social Care.
The rate at which new proposals are emerging from No 10 (almost Trumpian in its alacrity) is such that readers should exercise caution and not take precipitate action on their finances until the position on introduction of any additional taxation becomes clearer. This is only likely to happen at the October 2026 Budget at the earliest.
As discussed, radical reforms such as these are also likely to face stiff opposition, both in parliament and in the courts, and some (or even all) of them may never actually see the light of day, given the relatively brief remaining lifetime of this accident-prone Labour administration. It is also likely that a change of government on 2029 will be a radical one and see any politically controversial measures (i.e. most of those suggested!) that do get enacted before then, promptly abolished.
In a sense, looking beyond the current uncertainty, and any subsequent short-term financial pain that ensues, we should perhaps hope that Burnham does try to implement some of the more controversial tax measures. This should make it abundantly clear to the electorate the direction Labour intends to go in if it wins a second term, and allow them to make their own decisions as to its suitability.....
I will endeavour to update this blog and the downloadable tax calculator with any developments that materialise.
First published 28.7.26; Revised 28.8.26
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