Reports indicate that Andy Burnham, who has been discussed as a potential contender for Prime Minister, has a history of supporting various tax reforms that could reshape personal finances. These proposals span property taxes, income tax, inheritance tax, pensions, and capital gains tax.
Property Tax Proposals
Burnham has previously expressed support for changes to property taxes. One idea, proposed during his 2010 leadership bid, was a 'land tax' to replace stamp duty with an annual levy based on land value. More recently, he has backed a proposal from the campaign group Fairer Share, which suggests replacing stamp duty and council tax with an annual levy set at 0.48 percent of a property's value. This could lead to savings for homeowners of lower-value properties, with an estimated 18 million households in England potentially paying less annually. However, owners of more expensive homes could face higher bills. Critics have pointed to the complexity of re-valuing all homes and the potential shift of the tax burden from tenants to landlords.
Income Tax Considerations
While a Labour manifesto pledge reportedly commits to not raising income tax, National Insurance, or VAT, there have been discussions among allies about potentially altering income tax to fund spending plans. Burnham has previously indicated openness to raising the threshold at which individuals start paying income tax, known as the personal allowance. He has also spoken about the possibility of reintroducing a 50 percent top rate of income tax for high earners, while potentially lowering the starting rate for lower earners to 10 percent.
Inheritance Tax and Pensions
Burnham has suggested overhauling inheritance tax, potentially replacing it with a care levy or a flat 10 percent rate on all estates, which would eliminate the tax-free allowance and potentially increase the number of families liable for the tax. He has also indicated a willingness to review inheritance tax rules for farmers, which were recently altered. Regarding pensions, while he has vowed to keep the state pension triple lock, there are suggestions that this policy could be reviewed due to sustainability concerns. For those affected by changes to the state pension age, known as WASPI women, Burnham has previously supported calls for compensation but has more recently indicated openness to other forms of recompense, such as subsidised transport, rather than direct financial payouts.
Capital Gains Tax and Small Businesses
There are indications of a potential push to increase Capital Gains Tax (CGT) rates, aligning them more closely with income tax rates. Currently, CGT rates are lower than income tax rates, and proposals suggest equalizing them. This move has been met with criticism regarding investment risk and arguments for introducing inflation indexation. For small businesses, a potential policy could involve reducing National Insurance Contributions for employees, as Burnham has reportedly described recent increases as the 'wrong decision.' He has also suggested cutting business rates for certain sectors, such as pubs and music venues, and potentially eliminating rates for single-site shops, restaurants, and cafes.
Mortgage Rates and Market Impact
Changes in prime ministerial leadership can influence mortgage rates through their impact on gilt yields. If markets perceive increased government borrowing and spending, gilt yields could rise, leading to higher mortgage borrowing costs. This was notably seen following Liz Truss's mini-budget in 2022, which led to a spike in mortgage rates. Burnham has sought to demonstrate economic credibility by appointing economic advisors. Households facing remortgaging may consider locking in current rates to hedge against potential future increases.