Threat Of UK Wealth Tax Remains

The spectre of a Wealth Tax has resurfaced in Whitehall, following the UK government and Treasury’s recent refusal to rule out a levy on the nation’s richest residents.

Chief Secretary to the Treasury Darren Jones is leaving the door open to a UK Wealth Tax in the next Budget, despite Chancellor Rachel Reeves having previously rejected the idea. The Labour Party has, however, stopped short of endorsing a wealth tax outright.

Unofficial workings suggest a 2% levy on assets over £10mn, as suggested by Lord Kinnock, could raise £11bn – which would be very useful for the beleaguered national coffers (equivalent to 10% of the entire UK education budget in 2024). But some pundits think this is rather optimistic, warning of unintended consequences including capital flight (as we’ve already seen in the wake of Brexit and changes to non-dom tax breaks; research by Henley & Partners suggests the UK is set for a record wealth exodus in 2025, with more millionaire departures than any other country – including Russia, China and Israel).

While the notion of taxing the ultra-wealthy is a strong one, garnering popular appeal and appearing straightforward – the global track record paints a more complex picture.

Many countries have tried to tax the rich more effectively, but most have withdrawn their policies. Of 12 OECD countries with wealth taxes in the 1990s, only three retain them today: Switzerland, Norway, Spain.