The Rachel Reeves-led Treasury is under mounting pressure to undertake a full revaluation of England’s council tax bands in the upcoming budget, as the system remains anchored to 1991 property valuations and is widely viewed as outdated and unfair.
Under the preferred reform option being discussed, homeowners in the top three bands (F-H) would face a new annual levy on top of existing tax bills, potentially targeting properties worth more than £1 million or £2 million and raising less than £1 billion per year for the Treasury.
Analysts from the Institute for Fiscal Studies and the New Economics Foundation however warn that such a limited reform risks complicating rather than correcting the tax framework, and argue a full overhaul would be more effective.
Proponents of bigger reform say that updating valuations across the entire housing stock would make the system more proportionate, reflecting current market values rather than those of more than three decades ago. They argue this would reduce the burden on lower-value properties and more accurately fund local services. Detractors, including some Labour MPs, caution that older homeowners in high-value properties may struggle to meet higher bills, particularly if they are asset-rich but cash-poor.
The challenge for the government is not just designing a fairer tax but doing so without triggering voter backlash or undermining housing market stability. While the headline reforms remain uncertain, the debate underscores a broader tension in public finances: balancing revenue-raising, redistribution and political viability. Whether a modest levy or a sweeping reset is chosen, the decision will shape property taxation and local government funding for years to come.
