What is a wealth tax?
A wealth tax is a tax on the total value of what a person owns, such as property, shares, savings and businesses. It is not a tax on income. The UK has no annual wealth tax. Proposals usually target only the very rich, such as a 1% or 2% charge on wealth above £10 million.
Wealth in the UK is far more unequal than income. Supporters of a wealth tax argue that much wealth comes from rising house and asset prices, not work, and is lightly taxed. They say a small annual levy on the richest could raise billions for public services. In practice most proposals would cover only a few thousand of the richest households. The key design questions are the threshold, the rate and how to value assets.
Few countries still run annual wealth taxes. Norway, Spain and Switzerland are the main examples in Europe. Several others, including France and Sweden, scrapped theirs, citing low revenue, high costs and wealthy people moving abroad. Valuing private businesses, art and land each year is difficult. Wealthy people may also move assets or residence abroad, which reduces the revenue raised.
An alternative is a one-off wealth tax. A 2020 Wealth Tax Commission set up by academics suggested a one-off 1% a year levy for five years on wealth above £500,000. The UK does tax wealth in other ways, through inheritance tax, capital gains tax, council tax and stamp duty. Many economists argue reforming these would work better than a new tax.
Who it affects: About 20,000 people with over £10m
The left tends to support a wealth tax on the richest to reduce inequality and fund services without raising taxes on workers.
The right tends to oppose it, warning it would drive wealthy people and investment abroad and cost more to collect than it raises.
Britain is split. Now you decide.
Switch on an annual wealth tax over £10 million in the Population Decides Budget and see what it raises and who leaves.
Play Population Decides freeCommon questions
Does the UK have a wealth tax?
No. The UK taxes wealth indirectly through inheritance tax, capital gains tax, council tax and stamp duty.
Which countries have a wealth tax?
Norway, Spain and Switzerland are among the few that still have an annual wealth tax.
How much would a wealth tax raise?
Estimates vary widely, depending on the rate, the threshold and how many wealthy people move or avoid it.