The UK now has the highest property taxes of any developed nation, according to a new analysis, with households and businesses bracing for increased bills starting next week.
In the 2023/24 tax year, the UK’s property tax burden – encompassing council tax, business rates, and stamp duty – was 3.7% of its gross domestic product (GDP). This rate is the highest among advanced economies, surpassing other nations like Luxembourg, France, and Canada, which all had property tax burdens ranging between 3.4% and 3.5%, according to research by tax and software firm Ryan, using data from the Organisation for Economic Cooperation and Development (OECD). Korea placed fifth at 3.3%.
Israel, which had previously held the top spot for property taxes, dropped to sixth place with a ratio of 3.2%. The UK’s property tax-to-GDP ratio was significantly higher than the 2.7% average across the Group of Seven (G7) leading economies.
Despite a slight reduction of 0.3 percentage points from the previous year – thanks in part to larger business rate discounts for some companies – the UK still maintains its position as the country with the highest property tax burden.
This analysis comes as new tax hikes are set to take effect next month. Starting in April, households will face a 5% rise in council tax for the third consecutive year, with nearly all councils opting for increases close to the maximum allowed.
This will raise the average annual council tax bill for a band D property by £109 to £2,280.
The council tax hikes are largely a response to rising cost pressures and increased demand for local support services.
Meanwhile, in the housing market, stamp duty relief will also become less generous. First-time buyers in England and Northern Ireland will be required to pay stamp duty on properties costing more than £300,000, down from the current £425,000 threshold.
Additionally, many businesses, particularly in retail, hospitality, and leisure sectors, will see their tax bills rise when the government’s discount on business rates is reduced from 75% to 40%. This change, part of measures announced in last year’s autumn Budget, will add financial pressure on many small businesses already struggling with rising costs.