The UK now has the highest property taxes among developed nations, surpassing its global counterparts with a tax burden of 3.7% of GDP in the 2023/24 tax year.
This alarming figure, driven by council tax, business rates, and stamp duty, reflects the increasing financial pressure on both households and businesses across the nation.
With tax hikes on the horizon in April, many are bracing for further economic strain. According to recent analysis by Ryan, a tax and software firm, the UK’s property tax burden is significantly higher than any other advanced economy.
The country’s tax-to-GDP ratio outstrips other developed nations, and while there has been a slight reduction in the tax rate from the previous year, changes set for the upcoming tax year may cause further financial challenges.
UK’s Property Tax Burden Leads Globally
In 2023/24, the UK’s property tax-to-GDP ratio stood at 3.7%, placing it at the top of the rankings for developed nations. This figure is notably higher than other leading economies, with Luxembourg and France following closely at 3.5%, and Canada at 3.4%. In contrast, the G7 average for property taxes is considerably lower, standing at 2.7%.
The UK’s property tax burden is driven primarily by council tax, business rates, and stamp duty. While the rate has seen a slight decrease from the previous year, with some businesses benefiting from bigger discounts on rates, it remains a significant contributor to the nation’s tax structure.
Despite this decrease, the overall financial strain placed on households, particularly with the upcoming hikes, remains a concern.
Rising Taxes for Households and Businesses in April
The government’s upcoming fiscal changes are set to increase the tax burden for both residents and businesses. Council tax bills are set to rise by 5% in April, marking the third consecutive year of increases.
For residents in Band D properties, this will mean an extra £109 annually, bringing the total bill to £2,280. This increase reflects the growing cost pressures faced by local councils, which are grappling with rising demand for support services.
At the same time, stamp duty relief for first-time buyers in England and Northern Ireland will be significantly reduced. Currently, first-time buyers enjoy a stamp duty exemption for properties valued under £425,000, but this will be lowered to £300,000 starting in April.
Additionally, many businesses will face a larger tax burden as the government reduces its business rates discount from 75% to 40%. This change, introduced in last year’s autumn Budget, follows a trend of reducing financial relief for businesses, which may further challenge economic recovery.
