UK academics propose £10bn annual wealth tax targeting super-rich households
A new study by economists suggests a targeted two percent wealth tax on the UK's richest families could generate £10 billion annually, offering the new prime minister a streamlined mechanism to fund public services without broadening the tax base.
Economists Gabriel Zucman and Ben Tippet have proposed a two percent minimum wealth tax on UK households possessing more than £100 million in assets. The levy would apply to fewer than 1,000 of the nation's richest families and generate approximately £10 billion annually.
This targeted approach aims to bypass the administrative hurdles that derailed previous European wealth taxes. By focusing exclusively on extreme wealth, the proposal avoids the liquidity constraints and valuation complexities that typically burden smaller asset holders and private entrepreneurs.
The proposal arrives as new UK Prime Minister Andy Burnham prepares to outline his tax and spending plans on Tuesday. Burnham has signaled a desire to make the system fairer, telling Gary Lineker recently: “I do believe we need a greater sense of fairness and people feeling things are being done in the right way.”
To prevent avoidance through holding companies or family transfers, HMRC would calculate the collective wealth of these families. The scope includes property, private businesses, pensions, art, land and controlled charitable assets. Furthermore, a ten-year exit rule would prevent wealthy residents from simply relocating to escape the levy.
Tippet argues that because the tax targets such a narrow demographic, standard objections fail. He noted: “the familiar criticisms of wealth taxes – administrative complexity, asset valuation, liquidity constraints and impacts on entrepreneurs – do not hold.”
Zucman emphasized that the narrow demographic allows for rapid execution, stating: “Given the small numbers of households that would be taxed, the UK government could implement this quickly.” This aligns with broader international pushes, echoing 2024 calls from Germany and Brazil for a two percent global minimum tax on billionaires to raise £250 billion for poverty alleviation.
South African President Cyril Ramaphosa recently highlighted the urgency of such interventions at the G20, citing projections that $70 trillion in inherited wealth will change hands globally over the next decade. Meanwhile, New York City Mayor Zohran Mamdani has already implemented a second home tax and is advocating for wider wealth levies.
The academics contrast their model with historical European wealth taxes, which failed due to low thresholds and extensive exemptions for private business assets. Those flaws created avoidance opportunities and sparked political backlash from taxpayers who felt the burden was distributed unfairly.
