IMF warns incoming PM Burnham against raising top tax rate

Published 2 hours ago 28 sources

The International Monetary Fund has cautioned Andy Burnham, who is set to become Britain’s next prime minister on Monday, against raising the top rate of income tax, warning that such a move would damage the economy by discouraging work.

The advice came in the IMF’s 2026 Article IV consultation on the UK economy, published on Wednesday, which found that the country is already close to its tax policy limits. The fund noted that levies on VAT and property are already above international averages and that wealth taxes are difficult to capture effectively. Instead of raising the top rate, the IMF recommended higher rates on lower-paid workers — a politically contentious suggestion that is unlikely to find favour with the incoming Labour leader. BBloombergtax Iimf

IMF warns incoming PM Burnham against raising top tax rate

Burnham’s Tax Agenda Under Scrutiny

The IMF’s intervention lands as Burnham prepares to enter Downing Street with an ambitious tax reform agenda that has drawn both interest and alarm. He has long advocated replacing council tax and stamp duty with a proportional property tax, and reports suggest he may lower the threshold of the existing “mansion tax” — introduced in the November 2025 Budget at £2 million — to £1.5 million. Analysis from the Tax Policy Research Unit estimates that lowering the threshold would nearly double the number of homes caught, from around 127,000 to 243,000, potentially raising revenue to £800 million a year. Ttelegraph Ttaxpolicy

Shadow Chancellor Mel Stride has dismissed Burnham’s property tax proposals as “a huge tax rise,” while landlord groups have noted that no formal legislation or rate has been confirmed. Tthenegotiator Uukpropertyaccountants

Political Transition

Burnham won the backing of 94 percent of Labour MPs and will be formally elected party leader at a special conference on Friday. He is expected to be appointed prime minister by King Charles on Monday, succeeding Sir Keir Starmer, who announced his resignation last month. The IMF report — timed to coincide with the leadership transition — adds an immediate constraint to the fiscal choices facing Burnham’s government as it inherits an economy still contending with elevated inflation and sluggish growth amid the fallout from the Middle East conflict. Nnhk Bbbc Ttraverssmith Rreuters Iimf