Brits overwhelmingly back a wealth tax on the ultra-rich. Would it work in the UK?

Brits overwhelmingly back a wealth tax on the ultra-rich, a new survey has revealed, amid speculation Labour may consider introducing one.

Two-thirds of UK voters support a 2% tax on individuals with wealth over £10 million, new YouGov polling has revealed. Advocates estimate the levy could raise £11 billion.

Support spans political lines: 88% of Labour voters back the measure, followed by 83% of Lib Dems, 61% of Conservatives, and 55% of Reform UK supporters.

Read more:

• Wealth is increasingly in the hands of winners. It’s why Labour must introduce a wealth tax
• Britain has enough money to fix our problems. We just lack the political will to share it

The proposal emerged as the government reels from the near-defeat of its controversial welfare cuts bill. Last-minute concessions secured the bill’s passage – but at the cost of £5.5 billion in projected savings.

While chancellor Rachel Reeves has previously ruled out a wealth tax, Downing Street has not denied growing speculation.

“Those with the broadest shoulders should carry the largest burden,” a spokesperson said.

It is also another battleground for Labour to fight Reform UK. Farage’s recent announcement of a Britannia Card promised to give wealthy foreign residents favourable tax status for the price of a £250,000 upfront fee and then hand that cash to the poorest workers.

So would a wealth tax work? Here are the arguments for and against.

What are the advantages of a wealth tax?

A wealth tax is – as the name suggests – a tax on wealth. It’s “broad-based,” the experts at The Tax Commission say.

That means a tax on most (or all) types of assets that a person owns, rather than a levy on a specific type of asset like property. Net wealth means a person’s wealth minus any liabilities or debt.

The UK is among the most unequal countries in the OECD. The richest 10% of households own 43% of all wealth, while the poorest half own just 9%. As of 2023, the wealth of the UK’s 50 richest families exceeded that of 34.1 million people – over half the population.

A wealth tax could help correct this imbalance, says Jake Atkinson from Tax Justice UK.

“Inequality has skyrocketed. We have millions on NHS waiting lists, queues for food banks, millions of children in poverty, and then at the very same time, there are very, very rich people who have massive, massive amounts of wealth, which is currently under taxed.”

“It’s an open goal for the government.”

The current tax system favours the wealthy by taxing income from assets – like dividends and capital gains – at much lower rates than income from work.

“Right now, if I buy a share of Amazon stock and then sell it for a profit a few years later, my tax on that gain is going to be at a lower rate than what an Amazon warehouse employee is going to pay on her wages,” says Tim Stumpff from Patriotic Millionaires. “That just doesn’t make any sense.”

A wealth tax alone isn’t a silver bullet, he added. Equalising capital gains tax, taxing private jets, and closing loopholes around national insurance could generate even more revenue. But a wealth tax is a strong starting point – and good for the economy, too.

“If we had an NHS that worked, that didn’t have massively long waiting lists, we’d have fewer people missing work. If we had a better school system, we’d have a better educated society… If we had a public transportation system that worked, where trains aren’t getting delayed all the time up North, we’d have a much more productive economy,” Stumpff said.

“It’s a win-win for everyone.”

What are the disadvantages of a wealth tax?

Implementing a wealth tax isn’t straightforward.

“It would require the government to set up a new administrative apparatus to value wealth – and valuation would be extremely difficult for some assets, such as private businesses,” said Stuart Adam, senior economist at the Institute of Fiscal Studies.

Atkinson doesn’t dispute this – the ultra-rich often hide their assets, he warns. But the solution is simple: fund HMRC properly.

“HMRC already administer inheritance tax… they have the capacity to facilitate an asset register. We are up front that an investment in HMRC would be needed… but that would be a tiny, tiny percentage of what a wealth tax would bring in.”

Nigel Green, CEO of global financial advisory group deVere Group, said “even floating the idea is dangerous” as it erodes investor confidence.

“The ultra-wealthy will leave or reorganise to reduce exposure. The tax base shrinks, investment slows, and the very people the economy depends on are replaced by a credibility gap,” said Green.

The concern that the ultra-wealthy would leave the country to avoid the tax is often cited.

Trying to raise large sums from the very rich “would make the UK a less attractive place for those people to live,” Adam warned.

But Stumpff says that fear is overblown: “You’ll hear a lot of pushback: ‘Oh, these super rich people. They’ll just leave the country.’ That’s just a lie that’s been disproven over and over and over again.”

Analysis by Arun Advani from London School of Economics found that up to 17% of the people in the wealth tax bracket would leave the country – but that the state could still raise around £10bn a year from a 1% tax on assets over £10m.

Stumpff claims that other studies that warn of a “millionaire exodus,” are based on “highly unreliable and opaque methodology.” Migration rates among millionaires have remained steady at around 1% since 2013.

“The tax avoidance industry claims that all these bad things are going to happen. They never happen.”

Do you have a story to tell or opinions to share about this? Get in touch and tell us more.