Legal News | 30.07.26

Tax changes under a new Prime Minister: what could be ahead?

Following the appointment of Andy Burnham as Prime Minister, the Government has already announced a 20% reduction in business rates for pubs, clubs and music venues, a reduction in VAT on electricity bills, and a £2 cap on bus fares from 2027. However, what changes could there be for personal and property taxation? Although no formal tax manifesto has been published, several potential reforms have been mooted.

Property taxes

There has been a flurry of recent speculation about replacing council tax and SDLT. It is rumoured that two models are competing for support. First, a proportional property tax, which would replace both council tax and SDLT with a flat 0.48% annual charge on a home’s current value. Second, a land value tax, which would be an annual tax based solely on the value of the land itself (excluding any buildings or improvements on the land). Historically, Burnham has described this second model as “a very productive form of taxation.”

Inheritance tax (IHT)

Burnham has previously suggested a flat-rate inheritance tax of 10% could apply to all estates, with the aim of funding social care. Other media outlets have also suggested he could look further at the changes to Agricultural and Business Property Reliefs for IHT which have been deeply unpopular (particularly amongst the farming community) since they were introduced in April of this year (see our most recent article ‘Hay Bales and Tax Tales‘ on that subject).

Income tax

Potential changes could include adjustments to income tax rates and thresholds, with the possibility of higher thresholds to reduce the tax burden on individuals. Burnham has expressed recent frustration about the income tax allowance (frozen at £12,570 since 2021) but has confirmed that no immediate commitment will be made.

Capital gains tax (CGT)

It is possible that CGT rates could be aligned more closely with income tax rates. There has also been discussion around abolishing the “uplift on death” rule, which resets an asset’s base cost to its market value when the owner dies. In effect, this wipes out lifetime capital gains and beneficiaries only pay future CGT by reference to the value of the asset at the date of death.

What happens next?

At present, these proposals remain speculative and no formal announcements have been made. Any significant tax reforms are likely to be unveiled in the Autumn Budget.

For individuals considering estate planning, gifting, or succession arrangements, it is sensible to keep existing plans under review. If you require any assistance, please do not hesitate to contact the Private Client Team at Wansbroughs.