A Wealth tax for the UK

January 7, 2021by Frontier Group

The Wealth Tax Commission has released a study which calls for a one-off tax of 5% on assets above £500,000. This wealth tax could raise £260bn for public finances hard hit by the COVID-19 pandemic. The tax would also apply to all residents (including non-doms) on an individual basis rather than as a household.

The wealth tax would be based on the open market value of all of an individual’s assets, except for low value personal items (worth less than £3,000) on the basis there would disproportionate administrative costs for such assets.

The key points of the report are:

    • Tax would be calculated on the market value of an asset on predetermined dates of:

– Pensions

– Investments

– Savings

– The Primary Home

– Minus any debt, such as mortgages

  • Payment of the tax in five equal instalments over five years
  • Spouses or partners could pool their allowances effectively giving households more than £1M net wealth

The Commission was founded in April 2020 and, despite its name, is not a government-appointed body. The report considered a one-off wealth tax and an annual wealth tax. It concluded that a one-off tax would be fair, efficient and very difficult to avoid. It is unknown whether this is an option the government will take, however individuals should give this due consideration.

Frontier Group