The 5 biggest tax changes Andy Burnham could make – who wins and who loses_t

A finance expert has predicted five major changes that could happen when Andy Burnham becomes prime minister. It is thought that the former Mayor of Greater Manchester is virtually guaranteed to become Britain’s seventh prime minister in 10 years, as no one has stepped forward to challenge him yet. His premiership could mean changes to the tax system as Mr Burnham has said he believes Britain needs fundamental change, including “the biggest rebalancing of power our country has seen”.

He promised the biggest council house building programme since the post-war period, and major reform of business rates to revive high streets. The Chancellor, Rachel Reeves, is expected to vacate No. 11 Downing Street, and possible replacements include Wes Streeting, Ed Miliband and Yvette Cooper. Each, experts think, would manage the nation’s economy slightly differently.

Alex Pugh, chartered financial planner and Partner at wealth manager Saltus, has listed five key changes that could be in store after the new prime minister takes the helm from Sir Keir Starmer.

Mansion tax

Mr Burnham could lower the proposed mansion tax threshold from £2million to £1.5million, Mr Pugh thinks.

He said: “A lower threshold would mean significantly more homeowners facing an annual surcharge on top of their existing council tax bill, particularly in areas where property prices have grown significantly over recent decades. While a £1.5 million property may sound like a high-value asset, it does not necessarily mean the owner has significant disposable wealth available – many households may be asset-rich but cash-flow constrained, particularly those who are retired or approaching retirement and have much of their wealth tied up in their home. For someone on a fixed retirement income, an additional annual charge of several thousand pounds is not a marginal cost and it could fundamentally change whether staying in that property remains viable.

“The impact is also likely to vary depending on where people live. In some parts of London and the South East, for example, a property at this level may be a family home rather than a luxury property, meaning a wider range of homeowners could potentially be affected than the term ‘mansion tax’ might suggest.”

Land value tax

Mr Pugh said: “Many wealthy individuals hold a substantial proportion of their assets in residential property. Moving from a transaction based tax system to an annual property wealth tax would fundamentally change how that wealth is taxed.

“While removing Stamp Duty may benefit those buying and selling homes, a recurring levy based on property values could significantly increase annual costs for all homeowners, while those with high value homes, second properties and investment portfolios could see costs soar.

“There is also a human cost that is easy to overlook. Many people have inherited family homes that are now worth significant amounts on paper, but that doesn’t mean they have the income to support an annual tax bill based on that value. An annual property levy could force people who are asset rich but cash poor into selling homes that have been in their families for generations, not because they want to but because they simply cannot afford to keep them.

“There is also a broader concern that introducing a tax of this nature could weigh on house prices, particularly in areas where property values have historically been strongest. For investors and families who view property as a long term store of wealth, that creates an additional layer of uncertainty.”

Income tax

Mr Pugh suggested Mr Burnham could introduce a 50p additional income tax.

He said: “Although Andy Burnham has ruled out increases to the main rates of Income Tax, his comments suggest he remains open to asking those with the highest incomes to contribute more.

“For business owners, professionals and senior executives, the concern is not simply whether a 50p rate returns, but the wider direction of travel.

“Successive changes to tax thresholds, allowances and reliefs can have a meaningful impact on net income, even where headline rates appear unchanged.”

Capital gains tax

Capital gains tax could increase, Mr Pugh believes.

He said: “Capital Gains Tax has already been subject to significant change in recent years, particularly through reductions in allowances and ongoing speculation about closer alignment with Income Tax rates.

“For higher net worth individuals and business owners, CGT is one of the most sensitive areas of the tax system because it directly affects investment decisions, business exits and long-term portfolio planning.

“The risk is therefore not just incremental change, but a clearer policy push towards treating capital gains more like income. That could mean further reductions in reliefs, tighter allowances and a more explicit move towards Income Tax alignment, all of which would increase the effective tax burden on investment gains over time.

“Such a move would also be seen as detrimental to investment and growth in the UK, disincentivising both domestic entrepreneurship and making the UK a weaker option for global capital in what is a highly competitive landscape.”

‘Social care levy’

A “social care levy” could be created to replace Inheritance Tax, which would be charged on inherited assets, Mr Pugh suggested.

He said: “Inheritance Tax planning already faces a period of significant change, particularly with pensions due to form part of many estates for Inheritance Tax purposes from 2027.

“Any move to replace Inheritance Tax with a different levy may sound attractive politically, but for families it introduces another period of uncertainty. The practical impact would depend entirely on how any replacement system was structured.

“More broadly, investors tend to dislike uncertainty around wealth taxation because it can affect long term financial planning decisions. Whether it’s Capital Gains Tax, Inheritance Tax or broader wealth based measures, the lack of clarity can often be as damaging as the tax increase itself.”

Overall, Mr Pugh thinks there will be a general shift from taxing earnings to assets.

He concluded: “The key point here is that a Burnham premiership is more likely to shift the tax burden from earnings towards assets.

“His speech this week was deliberately focused on growth, devolution and opportunity rather than specific tax measures – and the markets clearly took some comfort from his commitment to existing fiscal rules. But the detail will follow, and the direction of travel he has set out across property, public services and regional spending suggests the tax environment for wealthier households is likely to become more challenging, rather than less.

“Obviously, at this stage, it is all speculative – he is not the Prime Minister yet, and even if he takes office in the next few weeks, as is widely expected, it is unlikely any radical policies would come into play any time soon.

“However, Andy Burnham’s track record – and the rhetoric of those around him – does suggest that individuals with significant property, investments, businesses, and inherited wealth could face a more challenging tax environment in the years ahead.”