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:
– 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.