Andy Burnham kicked off his Labour Leadership acceptance speech by declaring himself “ready”. As with his previous speech in Manchester he had a lot to say about policy direction, but little on tax specifics.

In both speeches Burnham spoke about fairness, economic renewal and giving people more control over the essentials of daily life, including housing and energy. He also took the time to badge himself as a “pro-business” leader.

Burnham has committed to following the existing fiscal rules and to the 2024 Labour Party manifesto pledge not to increase taxes on “working people”. This pledge is commonly understood to mean no increases in the main rates of income tax, employee National Insurance contributions or VAT. The manifesto also pledged not to increase corporation tax above its current 25% rate. This still leaves room for tax increases and given the commitment to extra defence spending and the in growing cost of living, it’s anticipated that there will be pressure for increased revenue.

Key tax measures to watch under Andy Burnham's government

Personal taxes

Capital taxes: capital gains tax and inheritance tax

Unlike some in the Labour Party, Burnham has not directly backed general wealth tax, although his proposed land value tax would target property wealth. He may also use reforms to capital gains tax (CGT) and inheritance tax (IHT). Ideally any major changes to CGT and IHT should be considered together as there is considerable interaction between them.

There appears to be growing sentiment in the Party that investment and passive income should be taxed more like earned income. Substantial CGT reform therefore appears to be on the table, though little has said by Burnham on the detail. Options could include aligning CGT rates more closely with income tax, removing the CGT uplift on death, and a possible introduction of an ‘exit charge’ on individuals leaving the UK. All these were considered in a review of CGT carried out by the Office of Tax Simplification in 2020.

Burnham has previously suggested replacing IHT with a flat-rate social care levy. During the Makerfield campaign, he also said he would review the agricultural property and business property relief allowance introduced in April 2026.

Any major overhaul may be difficult to deliver. Previous chancellors have shied away from large CGT changes, partly because they can trigger behavioural changes from wealthy taxpayers, perhaps even leading to reduced revenue forecasts. A broader package, rather than a simple rate rise for either tax, may be more effective.

Income tax and National Insurance contributions

Burnham has previously indicated he would be open to returning the additional rate of income tax to 50%, however, given his commitment to the manifesto pledges, this may be off the table - or at least delayed. In Makerfield, he promised to review the personal allowance, frozen since 2021 and set to remain so until 2031. Any change here would need to be funded, likely by tax rises or by spending cuts.

Some thinktanks have suggested that equalising the taxation of investment returns with earned income may allow the tax burden on earned income to fall. However, any movement in this direction is likely require more planning and may have to wait for a future year’s Budget.

Pensions

Reforms to pension tax relief and tax-free lump sum restrictions have been rumoured for over a decade. Nevertheless, pensions being brought with the scope of IHT from April 2027 may make further change politically difficult and potentially discourage saving.

Residential property taxes

Burnham has made positive noises about replacing council tax and stamp duty land tax (SDLT) with a land value tax. Council tax is widely viewed as outdated, based, as it is, on 1991 property values and SDLT is widely believed to discourage downsizing and reduce property transactions.

One option being suggested is for a flat rate tax (0.48% per year, perhaps) based on current residential property values, with a higher rate for second homes. This is not a quick fix; implementation would likely take years because of the need for a revaluation exercise. There are also practical and political difficulties as high house prices in some areas may not necessarily be reflected in income levels. A middle-ground could be to retain SDLT at lower rates, particularly for high value purchases, non-residents, second homes and investors while taking more time over any radical reform.

Business taxes

VAT

Another revenue-raising option would be to broaden the VAT base by reducing some of the exemptions on goods and services, for example food and books. Such a move may attract significant political attention, and could be counterproductive for a Prime Minister looking to tackle the cost of living.

Employer National Insurance contributions

Burnham has said the April 2025 increase in employer National Insurance contributions increase ”wasn’t the right decision”. Reversing it would be expensive, so he may instead focus on cutting the cost of employing people by increasing their take-home pay through a cut in employee National Insurance or income tax. This would also address his cost of living concerns

Business rates

Burnham favours significant reform to business rates, particularly for small businesses and hospitality. Relief could be funded by higher property taxes on larger warehouse businesses, vacant high street properties and possibly an extension to last year’s ‘tourist tax’.

Speculation on tax policy will continue while Burnham has made few firm commitments: commentators abhor a vacuum even more than nature does. The tax focus looks likely to shift towards wealth, property and investment income, while looking for ways to ease the pressure on “working people” and smaller businesses. The specifics, quantum and speed of change remain unclear.

The difficulty for Burnham, as for his predecessors, will be balancing competing priorities: the need to support growth, maintain economic confidence and remain within tight fiscal constraints. The Prime Minister has changed, but this challenge is all too recognisable.

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