Burnham: The Raid on Your Personal Wealth
‘Middle England’ is worried…and so it should be.
In his new role as our new PM, Burnham has, in his words ‘hit the ground running’ in his project to 'Manchesterise' Britain, and is looking for a new revenue generating target.
His ideology requires redistribution of the UK's wealth, and since most of the UK’s private money and assets are held by this disparate and normally compliant group of electors, they are firmly in his sights…..
One of the problems our new PM faces, however, is that he is constrained, as was his predecessor,
by Labour’s 2024 manifesto.Without going to the country for a separate mandate of his own, he is obliged to stick to its terms.
He can’t therefore raise any of the main existing tax rates without a breach. Tax thresholds are already deep-frozen, and reducing them further would cause an outcry. He also has another problem – 400 independently-minded back benchers, who already have a taste for power, and are not afraid to wield it. Many of these new MPs are conscious of the risk that they will lose their seats in 2029 (May '29, the most likely date for the election, is well under 3 years away now). This is because many of the new 2024 intake were elected as a direct result of the 'great Tory ‘putsch’ of '24', and their seats are therefore at significant risk of changing hands next time round, particularly if Labour’s unpopularity as a party is maintained, or (perhaps more likely despite Burnham's charm offensives) worsens.
The back-benchers have already 'tasted blood' by preventing Starmer from making significant inroads into the benefits bill, and forcing a screeching u-turn on WFP. Burnham is likely to hit the same ‘brick wall’ if he tries anything himself. He has, rather unwisely, also swept the ‘old guard’ away wholesale in his reshuffle without consultation or compensation, and thereby created an additional ‘axis of resistance’ on the back-benches. This rather naïve early strategic error on his part, although perhaps not as catastrophic as Starmer’s with WFP, may yet come back to haunt him.
Burnham also knows the Markets will not tolerate much if any additional borrowing; any that it does ‘sanction’ must be properly vetted by the OBR, who will have no doubt already told him he "can’t have any more at this difficult time". Thus his only option for funding the many diverse (and expensive!) projects he has on his burgeoning list is to invent new taxes to provide the extra revenue. These will undoubtedly all 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’ 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 !).
It should be noted that although ‘Middle England’ is a more diffuse grouping than the pensioners, and more difficult to define precisely, they are 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 them. Starmer's only attempt at defining them was to describe them as anyone earning more than £45k p.a. This definition in terms of income alone misses a swathe of people with lower incomes but valuable assets, who would be hit hard by wealth-based taxation if it were introduced.
Burnham himself is currently on a rare ‘popularity high’ (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!) and a £1 reduction in the bus fare cap.
The honeymoon will soon be over, I fear, once it becomes
clear just how much he intends to take away from most of us during his tenure.
It’s no coincidence that Burnham has flatly refused to call a general election before
2029 – he knows full well that he would be beaten even if it were held in
September, let alone any later, once the financial implications of his reforms for
all of us has sunk in. The current 'flurry' of announcements may be a psychological ploy (i.e. to moot worse case scenarios, then backtrack to more palatable ones). However such ploys can and do backfire if the public and the media 'cotton on'.
It’s a shame our electoral system doesn’t require any new party leader who takes over as PM to seek their own mandate. More to the point, we should also have more interim opportunities to influence policy - once every 5 years isn't really sufficient. Perhaps this should be addressed by the new 2029 administration ?
New Taxes Proposed
Here’s what has been put forward 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 feels that the current system is too much of a postcode lottery, given that our LAs determine council tax rates in their own areas, and these do vary considerably. A flat rate figure of 0.48% of property value p.a. across the UK has already been quoted - presumably this tax would still be administered by the LAs, given Burnham’s stated preference for more, not less, devolution to the regions.
Property valuations would be revised upwards from current (i.e.1991) values. Stamp duty would be abolished to help resuscitate the housing market, which is currently in the doldrums. The tax would undoubtedly hit home owners in the South East hardest, where few properties now weigh in lower than £1M (i.e. a bill of at least £4800 p.a.). Even a more modest new build valued at £400k 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 others living alone beware - you may well have to start paying over the odds for your solitude!
2) Social Care Levy on estates:
This new tax would be introduced specifically to fund the re-vamp of the broken UK Social Care system. Funding better Social Care is one of Burnham’s top priorities, largely because of his own family experiences with the existing system.
A figure of 10%, applied as a one-off ‘Death Tax’ levy on all estates at probate 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, as per the rest of the NHS.
This levy would ultimately hit everyone, but would not involve any payment before death. It would also, I suspect be even more hated than IHT, which is regarded as unfair 'double-taxation' by many. A 'death tax ' on estates is also considered unfair for those in their 70s and 80s who have already paid into the system in the form of income taxes and NI contributions, thus qualifying them for free healthcare over their remaining lifetime. They may well already have paid for care received under the current means-tested system, so arguably would be subsidising those still to come.
As in the case of IHT, application of this tax could lead to considerable post-death trauma for immediate relatives of a deceased's estate where there is little cash residue apart from property, particularly in areas where house values are high. This is because HMRC requires immediate payment on death of all tax due without waiting for probate. This often forces quick disposal of a property at a loss to meet the tax debt at a time when close relatives may well still be grieving. One of the more inhumane aspects of our tax system, to say the least…
NB 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 gets desperate enough for additional funding. A more likely alternative suggested is the possibility of
raising headline IHT rate from 40% to 50%, while maintaining current (frozen) £325k
threshold – the problem there for the exchequer is that not everyone would be contributing, as
they would with a flat-rate levy without a threshold. This would raise less revenue, and could be called out as unfair by placing the whole extra burden of funding care on a relatively small group.
More recently an alternative levy on workers’ salaries has been suggested. This would certainly be a fairer way of funding any future care provision, and is probably Burham's only chance of getting general buy-in, which he seems keen to do. Today’s retirees have only had access to the older means-tested system during their lifetimes, therefore won’t be able to get the full benefit of any improved social care system before they die. Although most of us only need care during our final years, some who are in poor general health may need it earlier in their lifetimes, whereas others may not need any at all if they die early. The levy 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.
3) New Wealth Tax:
This suggestion has been around for a while, and is put forward regularly by other parties, notably the Lib Dems, but has never been acted upon. 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 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 annual checks on individuals’ wealth and the resource that would be required. It's also likely that anyone wealthy enough to lose substantially by it would be able to find clever ways round the tax and might also decide to leave the UK, taking their not inconsiderable wealth (and tax take!) with them… the total revenue from the new tax could well be outweighed by the income tax revenue lost if substantial numbers did decide to leave. 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.
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/
Disclaimer:
Please note that none of the measures discussed above have been enacted into UK law as yet.
The rate at which new proposals are emerging from No 10 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. As discussed, radical reforms such as these are likely to face stiff opposition, both in parliament and the courts, and may never see the light of day, given the relatively brief remaining lifetime of this administration. It is also likely that a change of government on 2029 will see any measures that do get enacted before then promptly abolished….watch this space for updates.
First published 28.7.26; Revised 30.7.26
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