Door Left Open For Wealth Tax

The Labour government has refused to rule out a wealth tax, adding fresh jitters to Britain’s high-end property sector as uncertainty grows over how the ultra-wealthy may be targeted in the autumn Budget.

Despite Chancellor Rachel Reeves’ previous dismissal of the idea, her deputy Darren Jones repeatedly declined to shut the door in the Commons on Monday, fuelling speculation that a levy on the UK’s richest households could be on the cards.

“The chancellor will set out any decisions on tax one way or the other at the budget, which she will do in the autumn,” he said.

No.10 has leaned into its “broadest shoulders” narrative, defending earlier moves to close non-dom loopholes and hike taxes on private jets. But with a widening fiscal gap – estimated to exceed £20bn if growth stutters – the pressure is mounting to find new revenue sources without raising income tax for the broader electorate.

Support among Labour MPs and unions is building. Lord Kinnock has proposed a 2% annual tax on assets over £10mn, claiming it could raise £11bn. But critics warn that similar measures have flopped overseas.

Lord Macpherson, former Treasury permanent secretary and now chair of private bank C. Hoare & Co. said: “It is fantasy politics and impossible to take seriously. Why would a government which has almost certainly lost revenue on its non-dom reforms open up a new front on footloose billionaires? It would lose revenue, and is no substitute for taxing income or consumption.”

Paul Johnson, outgoing director of the Institute for Fiscal Studies, echoed the scepticism: “There’s little evidence that wealth taxes are effective… Most countries that have them have got rid of them. With the exception of Switzerland, none have ever raised any significant amount of money.”

Johnson added: “The place I’d start is that we’ve got wealth taxes that don’t work now. Council tax is the obvious one — let’s actually tax really expensive properties a lot more than we do. And inheritance tax is essentially a wealth transfer tax which doesn’t work very well.”

Globally, wealth taxes have a patchy record. In Norway, a recent rate hike triggered a billionaire exodus. In Spain, an additional “solidarity” tax on net wealth above €3mn now affects the top 0.5%, but overall receipts remain marginal.