Council Tax Hands London a £3bn Subsidy, Resolution Foundation Finds
London underpaid residential property tax by £3.1bn in 2024-25, according to new analysis, with every region outside the south-east and east overpaying. On current course 61% of households would be overpaying by an average £430 a year by 2030-31, while 36% underpay by £680. A household in Hull pays more than £1,800 a year above what it would owe at Richmond-upon-Thames’s effective rate. The foundation wants council tax replaced by a 0.7% proportional levy and stamp duty abolished.
The unfairness is structural rather than accidental: council tax still rests on 1991 valuations, so three decades of divergence between London and everywhere else has been frozen into the bills. That makes it the most regressive major tax in the system and, awkwardly for a government elected on northern votes, one that transfers money from poorer regions to richer ones every year. Hannah Aldridge of the Resolution Foundation was blunt: the two main housing taxes “are terribly designed, grossly unfair and economically harmful… the chancellor should set out a sensible roadmap to reform in the budget next month”. The politics are the obstacle — revaluation creates visible losers in marginal southern seats, which is why every government since 1991 has declined it. Watch whether the Budget mentions property tax at all.