[18.12.20]

There are a number of organisations stepping forward with ideas on how the current hole in the public finances could be filled.  One such organisation is the Wealth Tax Commission, which has produced a report recommending a one-off wealth tax rather than an across the board increase in taxes on earnings or spending.  The Commission argues that a one-off wealth tax on millionaire couples paid at 1% a year for five years would raise £260billion. 

The report follows research by a team of over fifty international experts on tax policy and practice. The three Commissioners are academics from the London School of Economics and Political Science (LSE) and the University of Warwick, and a leading barrister with long experience of advising High Net Worth individuals.  The Commission suggests a one-off wealth tax would:

• Be paid by any UK resident (including ‘non-doms’ and recent emigrants) with personal wealth above a set threshold.
• Include all assets such as main homes and pension pots, as well as business and financial wealth, but minus any debts such as mortgages.
• Be payable in instalments over five years.

The Commission argues that a one-off wealth tax would be fair, as those with the most wealth are able to afford an additional contribution to society; and the system would be efficient and easy to administer. 

The report does not set out the rates or thresholds for the suggested tax, but provides a range of options.  For example:

At a threshold of £1 million per household (assuming two individuals with £500,000 each) and a rate of 1% per year on wealth above the threshold, a one-off wealth tax would raise £260 billion over five years after administration costs. This is equivalent to raising VAT by 6p or the basic rate of income tax by 9p for the same period.

At a threshold of £4 million per household (assuming two individuals with £2 million each) and a rate of 1% per year on wealth above the threshold, a one-off wealth tax would raise £80 billion over five years after administration costs.

Alongside the report, the Wealth Tax Commission has launched an interactive website (taxsimulator.ukwealth.tax) that allows members of the public to model their own revenue-raising options, and see how much they would pay under different options.

Over the coming months we are sure there will be additional suggestions of how the Government could plug the hole in public finances.  Ultimately, we will have to wait until the Chancellor is ready to set out the new and updated taxation policies.

Castletons Accountants