Britain needs a wealth tax on property

The UK government is exploring new ways to raise revenue, and one proposal gaining traction is reforming the outdated council tax system. Currently based on 1991 property values, council tax is widely viewed as unfair: poorer households pay a higher share of property value, while the wealthiest often pay the least. Regional disparities also make the system inequitable, with similar homes taxed very differently depending on location.

The suggested reform would replace the top two council tax bands with an annual 0.5% wealth tax on high-value properties, and a 1% tax on unoccupied or agricultural land worth over £40,000 per hectare. Non-UK residents and second-home owners would face a higher 1% property tax rate, still lower than typical U.S. property taxes. Crucially, most homeowners and farmers would be unaffected, while safeguards such as deferrals for cash-poor pensioners would prevent undue hardship.

This shift could raise up to 9 billion pounds, reduce reliance on stamp duty, and discourage speculative ownership of luxury homes. The changes are designed to rebalance fairness, improve housing affordability, and support new development by lowering land costs. By targeting wealth at the top while sparing the majority, the reform promises both fiscal responsibility and a fairer property tax system.

For more information see John Muellbauer “Britain needs a wealth tax on property,” The Financial Times, August 31, 2025. 

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.