Andy Burnham becomes Prime Minister when Sir Keir Starmer steps down last month. It’s the seventh Prime Minister change in a decade — but for business owners, landlords and investors, the only issue is Westminster. It’s about what happens when and what’s going to come true of what’s being reported right now with respect to tax policy.
This is something that has to be clear. There are some things that really are confirmed. Others are speculation, media reports or ideas Burnham has had personal sympathy for, but not government policy. We’ve separated the two below.
What’s Actually Confirmed
Not everything about a new premiership is up in the air. Burnham will commit to:
Income Tax, VAT and National Insurance headline rates will not rise: this was a 2024 Labour pledge, which he has promised to keep.
Keeping to the Government’s current fiscal framework – balancing the day to day spending plan within the current parliament, not breaking the framework set out by the Government’s financial secretary Rachel Reeves.
A change to business rates to relieve the burden of high street businesses, pubs and hospitality venues with the cost possibly being passed on to larger out-of-town hotels and warehouses instead.
These are the best direction we can find, at this time, that is settled.
What do people actually say—and what isn’t it yet? What are the words being said—what is not the policy yet?
All of the following is from sources that are credible or from statements Burnham has made. None of it is law, and none of it is a foregone conclusion.
Capital Gains Tax: The most consistent was to align CGT rates around the income tax, possibly by moving from the current range of 18%/24% to more in line with the bands of 20%, 40% and 45%. So there’s also a suggestion that the CGT ‘uplift’ – which forces someone to pay tax on an asset they inherit after it has appreciated – will also be removed. Burnham has indicated that he is considering this issue in detail, but has not yet made a decision.
Burnham has expressed optimism about a proposal which has been discussed – including one from campaign group Fairer Share – to introduce a flat annual charge of around 0.48% of property value to replace Council Tax and Stamp Duty. On a £300,000 home, that’s broadly £1,440 a year. The impact would be quite different in different regions – lower bills for a lot of people in the North, a significant rise for those who pay higher prices for property in London and the South East, and a sizeable rise for landlords and commercial property owners as a whole.
Inheritance Tax reform: One suggestion has been to scrap IHT entirely in favour of a flat-rate social care levy on estates — an entirely different mechanism rather than a mere rate adjustment and, so far, little detail has been attached to this idea.
Burnham has admitted the £12,570 £1,000 will be a live issue and that he will be looking to review the allowance — but this is not necessarily a change.
All of these are not in a Finance Bill. Not all of them will reach this stage at all. However, the direction they head in – away from income taxes and towards property and gains taxes and taxes on accumulated wealth – is sufficiently consistent across many of the reports, and not something that can be ignored when considering planning.
Who This Could Affect
If even part of this guidance is followed, the groups that will be most affected are pretty self-evident:
-Property owners and landlords in the capital and South East in particular, if a land value tax is used in place of Council Tax and Stamp Duty.
-Business owners and investors considering a sale/disposal where CGT rates are likely to become close to Income Tax rates.
– If Inheritance Tax is reformed based on a care levy and not current rules, then the above families with significant estates.
-Business rates reform is a rare tailwind for high street retail and hospitality businesses, which stand to benefit.
– Out of town retail, warehouse and logistics operators who could have their business rates affected
The Real Risk Isn’t Any Single Policy
It’s making policy decisions based on rumours. It’s acting as though a rumoured policy is definitely happening or that it is not worth considering. Both are mistakes.
In recent years, it has been a trend that ideas that languish in the ‘just speculation’ camp for months can be brought into legislation at a much faster pace than anticipated after a budget has been actually presented. When it comes to evaluating a position, a wait-and-see approach can lead to a missed opportunity.
What To Do Now
– If you are considering a business or asset sale, know where you are now, otherwise you don’t know what you’re risking if rates change.
– If you are a property owner in London or the South East, especially as an investor or second home owner, keep an eye on the land value tax proposals
-If your Estate Planning was based on the existing Inheritance Tax legislation, see this as a reminder to review, not a panic call.
-If you own a high street shop, keep an eye on the business rates reform because this is the only area in which the direction appears to be favorable.
As you can see, there are many ways that Morgan Reach can help you.
The Prime Minister doesn’t change tax law overnight. But it does signal the beginning of a month-by-month clarification of the direction of the policy, and the ones best suited to respond are the ones who have already had the time to understand their own position — not those who rush in after a Budget has been published.
Morgan Reach is helping business owners, landlords and family offices around the UK and UAE to analyse structures, exposures and planning when it really matters — as head-on-to-head decisions are made — rather than being based on headlines.
If you want to know how any of this may impact your business, your property or your family’s wealth, we would be happy to discuss it with you.
Keep your assets safe, maintain your inheritance, and plan with peace.
