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Hot issue: Taxing wealth

Should the Budget tax the wealthy more?

The 28 October Budget must fill a gap in the public finances. Higher taxes on dividends, savings and rental income are already coming in, plus a council tax surcharge on £2m+ homes from 2028. Some Labour MPs want a wealth tax; ministers call that unlikely.

£14bna year that charging capital gains at income tax rates could raise (Centre for the Analysis of Taxation, via City AM)
Give your answerFree. No account needed. Then see how Britain split.

The options

  1. No new taxes on wealth, cut spending instead

    Rule out wealth and property tax rises, keep taxes low to attract investment and balance the books by spending less.

    Backed by: ConservativesReform UK

    Pick this option in the game
  2. Closest to what the government is doing now

    Targeted rises, no big new wealth tax

    Higher rates on dividends, savings and rent income, a surcharge on £2m+ homes, and possibly closing smaller loopholes.

    Backed by: Labour

    Pick this option in the game

  3. Tax gains from assets like wages

    Charge capital gains at income tax rates and end the rule that wipes out gains when someone dies.

    Backed by: Liberal Democrats

    Pick this option in the game

  4. An annual wealth tax on the super rich

    Charge 1% a year on wealth above £10 million and 2% above £1 billion, alongside higher taxes on gains.

    Backed by: Greens

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What happens next

  1. If an annual wealth tax is brought in

    The Greens estimate 1% above £10m and 2% above £1bn would raise about £15bn a year. Critics say valuing private firms, land and art is hard and avoidance would cut that.

    Green Party estimate; tax experts including the IFS question it
  2. If some of the very rich move abroad

    Revenue and some investment go with them. Norway raised its wealth tax in 2022 and saw well-known departures, though how many leave overall is disputed.

    Studies of Norway and Switzerland; tax justice groups dispute the scale
  3. If capital gains are taxed like income

    Around £14bn a year could be raised on one academic estimate. Investors may hold on to assets to avoid selling, so real receipts depend on the design.

    Centre for the Analysis of Taxation
  4. If the Budget sticks to targeted rises

    Smaller sums come from dividends, savings, rents and £2m homes. There is less risk of people leaving, but any remaining gap must come from wider taxes or cuts.

    The Treasury approach; critics on both sides
  5. If wealth taxes are ruled out

    Supporters expect more investment and entrepreneurs staying. The money must instead come from spending restraint, borrowing or taxes on income and spending.

    Low-tax campaigners argue
  6. If wealth stays taxed more lightly than work

    The gap between people who own assets and people who rely on wages may keep widening, especially between generations and between owners and renters.

    Inequality researchers such as the Resolution Foundation argue

The arguments

The case for taxing wealth more

  • Income from owning assets is often taxed at lower rates than income from work. Supporters say that is unfair and should be evened up.
  • Wealth has grown far faster than wages for decades, and much of it comes from inheritance or rising house prices rather than effort.
  • Billions could fund services, or tax cuts for workers, without raising the basic rate of income tax.
  • Polls consistently show strong public support for taxing the very richest more.

The case against

  • The very rich are mobile. If they leave, the UK loses not just the new tax but the income tax, VAT and investment they already provide.
  • Most European countries that had annual wealth taxes have dropped them as costly to run and raising little, the OECD found.
  • Many people are asset rich but cash poor, such as farmers and business founders, who might have to sell up to pay.
  • Taxing gains and wealth more can deter the investment and risk-taking that create jobs and growth.

The trade-offs

Questions to ask yourself

Sources

  1. cityam.com /?p=2452488
  2. burges-salmon.com /our-thinking/autumn-budget-2025-key-takeaways-for-private-clients/
  3. greenparty.org.uk /2025/11/19/green-party-leader-zack-polanski-says-our-message-to-rac…
  4. tax.org.uk /lib-dem-conference-2025-taxing-banks-not-pubs-and-farmers

Facts as of October 2026. Party positions reflect each party's current stated policy and may change.

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