If Introduced, How Could a Land Value Tax Work in the UK?

A land value tax does not exist yet. There is no confirmed rate, no draft law and no start date. Andy Burnham has supported the idea for years, which is why many landlords think it could be coming, but nothing has been formally proposed.

Whether landlords would pay more depends on details that have not been decided, including the tax rate, how land would be valued and whether it would replace council tax or stamp duty. This guide explains how an LVT could work and who might be affected.

What is a Land Value Tax? 

A land value tax falls on the value of the land alone, charged every year, regardless of what is built on it. Two identical houses would face very different bills if one sat on expensive city-centre land and the other on a cheap rural plot. Improve the building, extend it, refurbish it, and the LVT does not move. Let it fall derelict, and the LVT still does not move. The tax follows the ground, not the bricks. 

The economic argument is old and unusually cross-party. You cannot make more land, move it abroad or hide it, so taxing it does far less to distort behaviour than taxing wages, profits or spending. Adam Smith made the point in 1776; Milton Friedman later called a tax on unimproved land value the "least bad tax". That pedigree is why the idea keeps returning. 

The catch is practical. To levy an LVT you first have to value every plot of land separately from the building on it, and the UK has no register of land-only values. That valuation problem, more than the economics, is what has stopped it in this country for over a century. 

How Much is Land Value Tax? 

As at 14 July 2026, there is no nationwide Land Value Tax in the UK. This means HMRC has not set an official LVT rate, threshold or payment amount. HMRC’s current property-tax guidance covers taxes such as Stamp Duty Land Tax (SDLT) and the Annual Tax on Enveloped Dwellings, but not LVT. 

If LVT were introduced, the amount would depend on the rate chosen by the government and the assessed value of the land without the buildings. For example, a proposed rate of 1% on land valued at £200,000 would produce an annual bill of £2,000. This is only an example, not a current HMRC calculation. 

Who Pays Land Value Taxes? 

No one currently pays a nationwide Land Value Tax in the UK. Any future legislation would need to explain who is responsible, such as the registered or beneficial owner of the land. Until a scheme is introduced, claims about who would pay are based on policy proposals rather than HMRC rules. 

Under the existing system, different people pay different property taxes. Buyers pay SDLT on qualifying land and property purchases in England and Northern Ireland. Adult residents usually pay Council Tax, while people using most non-domestic properties generally pay business rates to their local council.

Three Ideas that Keep Getting Confused About Land Value Taxes

Most coverage mashes three different things together. Pull them apart and the headlines make a lot more sense.

What has Andy Burnham Actually Proposed About Land Value Taxes? 

Nothing formal. He argues the UK taxes work too hard and wealth too lightly, has backed a land value tax since his 2010 leadership bid, calls council tax regressive, and supports the Fairer Share campaign. All of that is a position, not a policy. 

He's the only candidate to succeed Sir Keir Starmer and is expected to become PM around 20 July. So far he's stuck to Labour's 2024 manifesto and its borrowing rules, with no tax plan of his own on paper. Wanting something and legislating it are different things.

One thing in this piece isn't speculation: property income tax rates rise by 2 percentage points from April 2027, taking the basic, higher and additional rates to 22%, 42% and 47%. That's already law, and it hits landlords now, well before any LVT ever could.

Why do Economists Support Land Value Tax, & What are the Objections?  

A Land Value Tax (LVT) is a yearly tax on the value of the land under a property, not the building itself. Two similar homes could therefore pay different amounts depending on their location. Supporters say it is hard to avoid, could discourage owners from leaving land unused and might help reduce taxes such as Stamp Duty. 

Critics worry that pensioners and other low-income homeowners may struggle to pay if their land has risen sharply in value. Valuing the land separately from the building would also be difficult, and the tax could push house prices down.  

How would Land Actually be Valued? 

Any land value tax would need a national system to estimate what each plot is worth without the building on it. Supporters say better data and digital tools make this easier than before. Critics argue it would still be costly, slow and open to disputes.

The biggest impact would likely be in London and the South East, where land makes up a large share of property values. For landlords, the postcode could matter more than the condition of the property.

What Should Landlords Do Now? 

Don't act on a policy that doesn't exist yet. Restructuring, selling early or rushing a purchase to dodge a charge that may never show up costs real money in tax, legal fees and transaction costs, all to guard against a maybe. 

There's a quieter version of this that's actually worth doing. Take the 0.96% figure and run it against your portfolio, just to see what it would do to net rental yield if it ever landed, purely as a stress test rather than a plan. Think about your ownership structure on a ten-year horizon, not a this-week horizon. If you've got transactions already planned, let them run their course unless something unrelated to LVT is pulling you away from them. And keep an eye on what would actually change the law rather than what makes the news: Budgets, consultations, Finance Bills, HMRC guidance. A speech from Burnham doesn't move the tax code. Legislation does.

Conclusion 

One or two buy-to-lets? An LVT is worth stress testing, not losing sleep over. A bigger portfolio, or anything high-value or non-resident, and the maths changes: the exposure under any annual-charge model is larger, so it's worth modelling properly rather than guessing. 

None of this is something a calculator can settle, since there's no rate to put into it yet. What a proper review can tell you is how well your structure would hold up if property tax moved from a one-off charge to something recurring, and whether holding personally or through a company still makes sense for where you're heading. If that's been nagging at you since the headlines started, get in touch and we'll talk it through.