A wealth tax on the UK's ultra-wealthy households could generate £10bn annually, according to academics who have urged the new prime minister to consider the measure. The proposal, backed by Andy Burnham, would impose a 2% minimum charge on households with assets exceeding £100m, affecting fewer than 1,000 of the richest families.
The study, led by Gabriel Zucman of the Paris School of Economics and Ben Tippet of King's College London, suggests that HM Revenue & Customs (HMRC) would calculate the accumulated wealth of these households, including property, businesses, pensions, art, and charitable assets. The tax aims to ensure billionaires pay rates comparable to the rest of the population while addressing inequality.
Burnham has hinted at incorporating a wealth tax into his 10-year plan for the UK, though his advisers have focused on aligning capital gains tax with income tax. Speaking to Gary Lineker, Burnham emphasised fairness without demonising any group, stating he wants to avoid creating divisions in society.
The academic report dismisses common criticisms of wealth taxes, such as administrative complexity and asset valuation, arguing that targeting a small group simplifies implementation. It also includes measures to prevent tax avoidance, such as requiring rich families to pay the tax for at least 10 years after leaving the UK.
Global momentum for wealth taxes is growing, with countries like Germany and Brazil calling for a minimum 2% tax on billionaires. The G20 has also highlighted the $70tn of inherited wealth expected to transfer over the next decade, widening inequality. The report concludes that a focused tax on extreme wealth is a realistic and targeted reform.
