UK property taxes highest in developed world

Over the last few weeks we have been discussing in detail the ever increasing tax burden for those looking to invest in UK property. This ongoing argument has attracted an array of different opinions but a report by the Organisation for Economic Co-operation and Development (OECD) has confirmed the situation. It is been shown that UK property taxes are the highest in the developed world today and the trend is moving against the OECD member average.

UK property taxes

This latest analysis of data from all OECD members confirms that property taxes in the UK now account for 12.7% of the total tax burden. These figures relate to 2014 (the latest information available) showing a 0.3% increase on the 2013 figures. When you also bear in mind that the UK government has significantly increased property taxes over the last couple of years, what will the figures for 2015/16 show?

Comparison to OECD members

In 2014 the average percentage of property tax compared to the total tax burden was just 5.6% across all 35 OECD members. These figures clearly show a divergence in the UK which is more than double the average. When you bear in mind that the figures for powerhouses such as Germany is just 2.6%, Spain 7%, Japan 8.5% and even the US 10.8%, this perfectly illustrates the problems for UK property investors. It is common knowledge that governments now see the property market as a cash cow when looking to balance budgets.

It is also worth noting that since 1965 the average figure across OECD members has fallen from 8% down to 5.6% while the UK has gone in a different direction. This analysis also throws an interesting light on Australia, Canada, South Korea and the US which are the only other developed countries where property tax equates to more than 10% of the total tax burden.

Will this trend change?

At this moment in time there are no signs that the UK government has any plans to reduce the tax burden on property transactions. Indeed, as we touched on above, we have seen an increase in property taxes over last 12 months with the buy to let and second home markets hit hardest. An adjustment in stamp duty levies across the UK has also increased the burden for those at the higher end of the property value scale. How long can this go on?

Over the last few months we have seen signs that property tax increments may have peaked with a reduction in actual tax income in cold hard pounds. This would seem to indicate that lower tax rates encourage more activity in the market and lead to an increase in actual income. If you take a step back and look at the situation from a distance, despite the fact that increased property tax rates have not resulted in greater income the politicians just don’t seem to understand this.


If ever evidence was required to show that the property tax regime in the UK is amongst the harshest in the world, this report from the OECD lays everything out in facts and figures. Whether we will see a change in UK government policy in the short to medium term remains to be seen because, like so many other governments, the UK is struggling to balance its books. So, at this moment in time it does look as though property in the UK will remain the “go to cash cow” for politicians.

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