Six wealth tax policies that could raise £50 billion

The government could raise up to £50 billion by reforming the way it taxes wealth, according to our new research with Patriotic Millionaires UK.

​​There is a growing consensus that higher taxation of wealth could help solve current  economic crises – from low productivity growth to crumbling public services and wage  stagnation. 

---

Ask your MP to back wealth taxes using our free online tool:

Send a message to your MP

---

The IPPR, the IMF, the Resolution Foundation, the IFS, and even the  Conservative-aligned think tank Bright Blue have all called for higher taxes on wealth in  response to these crises.

With the UK economy experiencing the slowest growth of any  country in the G7, the government should announce fairer and more robust taxes on  extreme wealth in its upcoming budget. This could enable investment in essential public  services and help to improve economic dynamism and growth. 

Higher taxes on the wealth of the super-rich enjoy widespread popularity among voters  across the political spectrum. Recent polling from YouGov found that 78% of voters  support an annual wealth tax on those with assets worth over £10 million, including 77%  of Conservative voters and 86% of Labour voters. A further 62% supported equalisation of tax rates on income from work and income from wealth. 

The following six policies comprise Patriotic Millionaires UK and Tax Justice UK’s top policy recommendations for improving fairness, simplifying the tax system, and raising  revenue ahead of the 2023 Spring Budget.

1. Apply a 1-2% wealth tax on assets over £10 million, raising up to £22 billion a  year. 
A small wealth tax applied to those at the very top of the distribution would affect only 0.04% of the population. This makes it much easier to administer than annual wealth  taxes set at a lower threshold, as it would affect only around 20,000 people. It would  ensure that those who have benefited enormously from structural economic changes over  the last decade contribute fairly and create significant revenue for national renewal. 

2. Equalise capital gains with income tax rates, raising up to £15.2 billion a year. 
This would have the positive effect of simplifying the tax system and treating all forms of  income in the same way. It has support from 62% of voters, according to recent research from academics at the University of Oxford. There is no obvious reason why someone  going to work should pay more tax on their wages than someone living from their  investments, for example. According to the Office of Tax Simplification, who advocated  for this policy change in 2020, it could raise significant revenue for public spending.

3. Apply national insurance to investment income, raising up to £8.6 billion a  year. 
Instead of just focusing on the rates of National Insurance, the government should expand  the tax base by applying National Insurance to income from investments – such as  dividends from shares, rent from property, and interest on savings. This would equalise  and simplify the treatment of different types of income under the taxation system, and  ensure that income from wealth is taxed at the same rate as earnings from work. It would  raise around £8.6bn. Simplifying the tax system would also substantially reduce tax  avoidance by limiting possible avenues for avoiding tax. 

4. End the inheritance tax loopholes that benefit the already wealthy, raising up  to £1.4 billion a year. 
The government should scrap or reform Business Relief and Agricultural Property Relief  on Inheritance Tax. There is evidence that these inheritance tax reliefs are being used as  loopholes by a small minority of the very wealthy to avoid paying the appropriate  inheritance tax on their assets. Abuse of Agricultural Property Relief is likely pushing up  the price of agricultural land for genuine commercial food production and has this year  been criticised by the Office of Tax Simplification. Scrapping these reliefs could raise  over £1.4bn a year. Alternatively, the Resolution Foundation has proposed reforms to  prevent them being exploited, generating a smaller saving. 

5. Reform the rules on non-dom status, raising up to £3.2 billion a year. 
Non-domiciled residents in the UK (‘non-doms’) receive at least £10.9 billion in offshore  income and capital gains each year, which they are not required to report to HMRC or  pay tax on in the UK. Taxing this income would raise more than £3.2 billion in additional  tax revenue each year and also remove the current disincentive to invest in the  UK, according to research by academics Dr Andy Summers and Dr Arun Advani.
​
6. Introduce a 4% tax on share buybacks, raising approximately £2 billion a  year. 
Some of Britain’s largest companies are transferring profits to their shareholders at record  levels. According to IPPR, if the UK had implemented a share buyback tax at President  Biden’s proposed 4% rate, it would have raised £2.2 billion in 2022. Taxes on shareholder transfers would help to ensure that companies are not channelling profits to their shareholders at a time of national economic crisis and encourage investment in the real economy. Share buybacks artificially boost the value of shares that are overwhelmingly  owned by the wealthiest in society. 

​These revenue figures are estimates based on research from government institutes,  academics, and think tanks. In particular, the work of economists Dr. Arun Advani (University of Warwick) and Dr. Andy Summers (London School of Economics), co authors of the final report of the UK Wealth Tax Commission.

​This policy package is an  updated version of analysis released by Tax Justice UK ahead of the 2022 Autumn  Budget. Changes reflect new revenue estimates for annual wealth taxes and Capital Gains Tax reform, as well as the inclusion of a tax on share buybacks in response to their  rising prevalence, most notably in the US under President Biden.

---

Ask your MP to back wealth taxes using our free online tool:

Send a message to your MP

---