What is a wealth tax?
A wealth tax is an annual levy on an individual’s total net assets – property, investments, cash, even antiques or art – above a given threshold. The idea is to directly target accumulated wealth, not just income. In the UK there are already some taxes on wealth – inheritance tax, capital gains tax, and council tax – that could be tightened up before a new tax is introduced.
The pros
A modest wealth tax aimed at the ultra-rich, for example those with assets over £10m, could generate significant funds. One study suggests a global levy on the top 0.5% could raise about $2.1tn – roughly 7% of national budgets – with the UK alone bringing in around $31bn a year. That revenue could be transformative if used to fund the NHS, education, affordable housing, climate resilience, and long-term care.
There is also a political benefit: by launching something new with a specific name, it would appeal to the majority of voters who back higher taxes on the very rich.
In Britain, like much of the developed world, the wealth of the ultra-rich has ballooned dramatically in recent decades, while ordinary workers have faced stagnant wages and prolonged austerity and there are record numbers of children growing up in poverty. In 1990 the Sunday Times rich list recorded 15 UK billionaires. By 2023, that number had risen to 171, holding an average of £4bn each.
Today the richest 1% in the UK own more wealth than the bottom 70% and, according to Oxfam, UK billionaires pay “effective tax rates close to 0.3% of their wealth”. Advocates say a wealth tax is a fair way of redistributing a small proportion of that money to help those most in need.
Campaigners also say the money could be used to fund climate transition efforts. Taxing assets tied to high-carbon lifestyles – yachts, private jets, fossil fuel holdings – could shift both wealth and incentives while raising revenue for green infrastructure projects.
Surveys consistently find strong backing among the public for a wealth tax. Three-quarters of Britons were found to back a 2% tax on wealth above £10m. Many wealthy individuals, including those in Patriotic Millionaires UK, also publicly endorse such measures as patriotic and socially responsible.
The cons
Because wealth comes in diverse forms – business equity, art, land, intellectual property – it is hard to measure, especially if there is an army of lawyers trying to hide it. This complicates enforcement and drives up administrative costs.
There is also the spectre of “wealth flight”, fears that wealthy people will pack up their riches and leave if the government tries to tax them further. An analysis by the Tax Justice Network found that there were an average of 30 news pieces a day last year raising the prospect of a wealth exodus.
But the evidence is inconclusive at best and the analysis found that the 9,500 millionaires it has been claimed left the UK in 2024 represented 0.3% of the UK’s 3.06 million people with assets of more than £1m.
It also highlighted other places where the introduction of a wealth tax led to little or no “wealth exodus”. For instance in Scandinavia, after wealth tax reforms, only 0.01% of the top 0.5% relocated and in the UK changes to non-dom rules in 2017 showed just a 0.02% move.
The report found tax concerns were low on the list of concerns of the ultra-wealthy when deciding where to live: “Tax is an inconsequential factor in the decision-making of the vanishingly small percentage of millionaires that do decide to move.”
However, the fear that some ultra-wealthy individuals will leave the country entirely is not unfounded. Global capitalism has become highly mobile in recent decades through globalisation, government deregulation and improved connectivity. The Wealth Tax Commission in 2020 said it was likely that some of the ultra-wealthy were likely to leave or move their assets to low-tax regimes or tax havens.
In short
There are real challenges in designing a wealth tax and administrative complexity would be a continuing issue. A wealth tax on the ultra-rich might also lead some to move assets out of the UK, but scare stories of mass millionaire departures do not hold up to scrutiny. Advocates say that given widespread public support, the UK’s administrative capacity, and pressing fiscal demands, a progressive tax on the ultra-wealthy is feasible and necessary. The challenge lies in careful design, robust implementation and, most of all, political will.
