Harriet Murray explores the implications of paying for the pandemic with a wealth tax in Lawyer Monthly

Harriet’s article was published in Lawyer Monthly, 2 August 2021, and can be seen here.

Harriet Murray, Senior Associate in our Private Client department, summarises the findings of the Wealth Tax Commission, which was established in April 2020 in response to the economic fallout from the COVID-19 pandemic.

The Commission, comprising academics and a barrister, aimed to assess the feasibility and desirability of a wealth tax in the UK.

After extensive consultation with international experts and supported by academic funding, the Commission concluded that a one-off wealth tax could be a fair and efficient way to raise significant revenue. This tax would be based on the open market value of an individual’s assets (including homes and pensions), minus debts, and would apply above a certain threshold. It would be payable over five years, with provisions for joint assessment for couples and specific rules for trusts and non-residents.

The Commission did not recommend an annual wealth tax, citing practical challenges, and instead called for broader reform of existing wealth-related taxes.

While it refrained from setting specific thresholds or rates, it illustrated that a 1% annual tax over five years on wealth above £500,000 could raise £260 billion. Relief mechanisms were proposed for those facing sudden financial hardship or liquidity issues, and exemptions would apply to items under £3,000 to simplify administration.

Ultimately, the Commission positioned the one-off wealth tax as a targeted, crisis-driven measure preferable to increases in VAT or income tax, while also advocating for long-term structural tax reform.

Read the full article on the Lawyer Monthly website [external link].