TThe UK owned tax system is both ineffective and unfair. There is consensus on all political parties that need to be made. On the side of excellence, the role of the stamp is the main culprit: As a wealth tax tumor of the purchase paid to the purchase, it encourages people to move as often as you should. It prevents people from realizing their full economic potential by finding the right job, to the right place, or moving to a home suitable for their household size.
With the integration of high interest rates and growth growth, the tax contributes to the UK -owned transactions that reach near record lows. Meanwhile, more than one third of the English households live in government-defined homes as “not conquered”, with two or more spare bedrooms; 90% of them are home -owned. The stamp’s duty to release some of these subjugated features-more than all is concentrated on the generation of baby-boomers that now hit retirement-can enhance growth, productivity and, potential, usability.
I say “potential” because it has been properly established that the reduction in the tax taxes increases demand for home ownership -and in turn, home prices.
There seems to be no appetite for this fact, both conservatives and reforms have suggested major reductions in the overall burden of taxation. Kemi Badenoch has pledged to eliminate the role of the stamp at the main quarters. The UK reform has suggested a smaller reduction of stamp duty but added to heritage tax cuts and the restoration of some tax convenience with -owner.
These policies will increase demand for housing as a financial owner, and thus the prices. Such reforms will most benefit from those in London and southeast with the most expensive homes and those who tend to move more often, while higher prices will cancel the benefits for the first consumers, such as the subsidies of assistance under conservatives. Raising prices will also weaken incentives for empty nests.
On the side of fairness, the council tax has become an important wealth tax on low -income earners. A part-based tax-based tax service provided public services and partly in the value of the property, it is “based on the band”, with those in the higher band paying more. The bands were introduced in 1991 and politicians decided not to re -evaluate them since, despite home prices in some areas of the country that have risen seven times. As a result, households under 10% of the amounts of ownership pay, on average, more than 0.7% of their cost of ownership a year, while those in the top 10% pay less than 0.1%. A multimillion pounds mansion in Westminster may have less taxes than a moderate home north of England.
The tax tax system also favors home -owned renters and investments in other financial ownership. Few people know this, but until 1963 there is a tax imposed on the home -owned rent that they pay if they rent their homes: so it is called the imputed rent, a tax that is still imposed in the Netherlands. Most importantly, due to the explosion of home prices since the 1980s, home -owned people have enjoyed 100% tax relief that tax sales tax on their main accommodation. At £ 31.5bn in 2023-24, it was the single largest tax relief in the country, equivalent to 1.15% of GDP, almost equivalent to the operation of the home office and combined with the Ministry of Justice.
All of these flaws are combined to drive investment and lending to the UK towards the owner, rather than investing capital or equity in businesses. It is a major but mainly neglected cause for motionless productivity and growth levels as well as the crisis of use.
Effective tax tax reform requires a strategy that prevents investment demand and excessive consumption of UK housing and releases stock for those who really need it. Among the left and right economists, there is an increase in consensus that the UK needs a “big bang” rather than increasing reform. Changing the duty of the stamp and council tax reform with the annual proportional tax tax (PPT) of around 0.5% in the value of the home market – or the value of the land under it – will face both challenges and unfair challenges within the existing system. Research of the fair sharing campaign shows that it will benefit from three quarter of the population, at least the “red walls” chairs that the manufacture is haemorrhaging in reform.
Complications arise because council tax is also an important source of funding for local public services; Poor areas can end with the need for a major shift from the central government, resulting in more centralization of the fiscal. A recent ex-government adviser Tim Leunig has argued for councils to control funds from a PPT to homes under £ 500,000, setting their own rate and with a minimum payment of £ 800, while the central government will take funds from the above properties to a £ 1m.
The rumors spread that the Treasury was seriously considering the scheme. Political risks are highly given by the media often angry with any new tax tax. Labor needs to be brave and make a positive case for transferring the tax burden to people’s employment to unchanged wealth. A radical tax reform in possession can help deliver three of its key policy goals: reducing wealth increase and regional inequality, resolving housing crisis and stimulation of economic growth.
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Josh Ryan-Collins is a professor of economics and finances at the UCL Institute for Innovation and Public Purpose
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This article was amended on 15 October 2025 to remove a reference that Switzerland still imposed on the rent; The country voted to destroy it on September 28th this year.
