Harriet Murray examines whether a wealth tax is the way to pay for the pandemic in Accountancy Daily

Harriet’s article was published in Business and Accountancy Daily, 21 September 2021, and can be seen here.

Harriet Murray, Senior Associate in our Private Client department, reflects on the findings of the Wealth Tax Commission, which was established in response to the economic fallout from the COVID-19 pandemic.

The Commission concluded that a one-off wealth tax could raise substantial revenue in a fair and efficient manner, with minimal avoidance and manageable administrative costs. The proposed tax would apply to net wealth above a certain threshold, including assets such as main residences and pensions, and would be payable over five years.

While the exact thresholds and rates would be determined by policymakers, illustrative models suggest that a 1% annual charge over five years on wealth above £500,000 could raise up to £260 billion. The tax would apply to UK residents and certain non-residents with UK assets, with provisions for joint assessments and reliefs in cases of financial hardship or significant post-assessment losses.

Despite the Commission’s detailed proposals and evidence-based approach, the government has not endorsed the recommendations. Political hesitancy, administrative complexity, and concerns over public reaction may be contributing factors. While polling suggests general support for a wealth tax in principle, practical implementation, such as valuing diverse assets like private company shares or artwork, could prove burdensome.

With the UK still grappling with the fiscal consequences of the pandemic, the future of a wealth tax remains uncertain, though broader tax reforms may be on the horizon.

Read the full article on the Business and Accountancy Daily website [subscription required].