Go back to insightsWealth Tax Back in the Spotlight
With another challenging Autumn Budget on the horizon, discussion of a potential wealth tax has once again returned to the political agenda.
Following the Covid-19 pandemic, there was considerable debate about how the government might address the significant strain on the public finances. One proposal that attracted widespread attention was a wealth tax. In late 2020, the independent Wealth Tax Commission published the results of extensive legal, economic and tax research into how such a tax might operate. Although the Commission stopped short of formally recommending a particular approach, the proposal that generated the greatest interest included:
- A one-off tax of 5% on individual wealth above £500,000. An annual wealth tax was considered but ultimately rejected due to concerns about complexity and administrative costs.
- A broad definition of wealth, encompassing property, business interests and pension assets, regardless of where they were held.
- The option for taxpayers to spread payments over five years, with interest applied, despite the tax being charged only once.
At the time, the Commission estimated that such a measure could raise around £260 billion in total, equivalent to approximately £52 billion a year over five years, plus interest. While substantial, this figure should be viewed in context. Government debt stood at £2.943 trillion in April 2026, compared with £2.155 trillion at the end of the 2020/21 financial year.
Successive governments chose not to pursue the Commission’s proposals. Instead, under Rishi Sunak’s tenure as Chancellor and later Prime Minister, revenue was raised through alternative measures, including higher corporation tax rates and the freezing of various tax bands and allowances. Those freezes have largely remained in place under subsequent administrations.
Today, the concept of a wealth tax continues to feature in political debate, albeit in different forms. The Green Party has proposed an annual tax of 1% on assets exceeding £10 million, increasing to 2% on assets above £2 billion. Meanwhile, Health Secretary Wes Streeting has advocated a “wealth tax that works”, by which he has suggested bringing capital gains tax (CGT) rates closer to income tax rates.
Predicting how much either approach might raise is far from straightforward. There are several reasons for this uncertainty:
- Comprehensive data on individual wealth remains limited, making revenue forecasts difficult. While the Green Party estimates its proposal could generate around £15 billion annually, some commentators have questioned whether this figure is achievable.
- The behaviour of a relatively small number of very wealthy individuals can have a significant impact on tax receipts. For example, HMRC’s latest CGT statistics show that in 2023/24, just 10,000 individuals, representing 2.8% of CGT taxpayers accounted for 64% of all capital gains tax paid.
When tax changes are being discussed, it can be tempting to take action in anticipation. However, planning around proposals that have not become law is often unwise. Tax legislation can change substantially during the policy-making process, or fail to materialise altogether.
A more prudent approach is usually to focus on the rules currently in force and ensure your financial plans remain aligned with your long-term objectives. Recent experience provides a useful reminder: some individuals rushed to access pension benefits ahead of the last two Budgets based on fears of possible reforms that ultimately did not occur.
Tax treatment depends on individual circumstances and may be subject to change in the future.
The Financial Conduct Authority does not regulate tax advice.
10th July 2026