Andy Burnham’s Potential Tax Reforms Ahead of a Possible Premiership

Andy Burnham, the Makerfield MP and former Greater Manchester mayor, is the sole remaining candidate in the Labour leadership contest to replace Sir Keir Starmer. Backed by 322 of 403 Labour MPs, he is expected to assume the premiership on 20 July. Burnham has repeatedly pledged not to raise income tax, national insurance or VAT and says he will follow Chancellor Rachel Reeves’s fiscal rules, which require day-to-day spending to be covered by tax revenue and public debt to fall as a share of the economy.

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• Business rates – A 20 % cut for pubs, clubs and music venues and a higher threshold that would exempt many small high-street retailers. Funding would come from levies on large-scale warehouses and owners of empty properties. *Likelihood: high; already pledged as policy.*

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• Income-tax devolution – Allow regional mayors to set local income-tax rates. Jim O’Neill, a former Goldman Sachs chief economist advising Burnham, says the idea should be “studied” rather than implemented imminently. *Likelihood: low in the short term.*

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• Capital-gains tax alignment – Bring the 18 % and 24 % CGT rates into line with income-tax bands of 20 %, 40 % or 45 %. The change would be easy to enact but could provoke controversy and reduce revenue if asset sales are delayed. *Likelihood: moderate.*

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• Personal allowance – Raise the £12,570 threshold that is frozen until 2031, allowing more earnings to remain untaxed. *Likelihood: moderate; could appear in the first autumn Budget.*

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• Mansion tax threshold – Lower the high-value council-tax surcharge from £2 m to £1.5 m, potentially adding 150,000 homes and raising about £800 m annually. *Likelihood: moderate but revenue impact limited.*

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• Employer national insurance – Burnham has criticised the October 2024 increase as “wasn’t the right decision” and may seek reversal, though finding the £25 bn needed would be difficult. *Likelihood: low to moderate.*

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• Council-tax/land-value tax reform – Proposals to replace council tax with a land-value tax or a proportional property tax would require a nationwide revaluation, making them long-term projects. *Likelihood: low.*

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• Inheritance-tax “care levy” – Replacing the 40 % inheritance tax with a levy to fund a National Care Service. The funding gap and logistical challenges render this unlikely in the near term. *Likelihood: low.*

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Burnham has said there is “some room” for movement on tax within the Labour manifesto and that he wants his team to “have a proper look” at raising the personal-allowance threshold. He described the employer-national-insurance increase as “wasn’t the right decision” and emphasized the need to “listen to the voice of small business.” Jim O’Neill supports studying income-tax devolution, while Burnham’s ally Louise Haigh backs aligning CGT with income-tax rates.

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The proposed CGT alignment and inheritance-tax reform are identified as “controversial” and could risk revenue loss if asset owners delay sales. Analysts note that a modest 1 p rise in the basic income-tax rate would generate eight times the revenue projected from the mansion-tax threshold reduction.

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• “more that needs to be done to listen to the voice of small business” — Andy Burnham, BBC Newsnight

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• “inheritance tax and care charges” — Andy Burnham, The Guardian interview

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