Sources · An annual wealth tax
This house would introduce an annual tax on the very wealthy.
Fact bank v1 · 12 cards
- WT-01True
“In Britain, wealth is shared out far more unequally than income.”
Confirmed: the ONS found that household wealth in Great Britain is spread much more unequally than income. On a common 0-to-1 inequality score (the Gini), wealth scored 0.59 and take-home income scored 0.36.
On this score, 0 means everyone has the same and 1 means one household has everything. The wealth figure covers April 2020 to March 2022, and the income figure covers the year to March 2022. The OECD says wealth gaps are far bigger than income gaps in rich countries generally. Surveys like this can miss some of the very richest households.
“Household wealth was distributed considerably more unequally than household income.”
Office for National Statistics·Household total wealth in Great Britain: April 2020 to March 2022Official statistics · 24 Jan 2025 ↗Further sources for this card
- WT-02True
“The richest 1% of British households own as much wealth as the poorest half put together.”
Confirmed: between April 2020 and March 2022, the richest 1% of households held 10% of all household wealth in Great Britain. The poorest 50% of households held the same share between them.
To be in the richest 1%, a household needed at least £3,121,500, counting homes, pensions, savings and belongings. The middle household had £293,700. The survey was done by phone during the pandemic, which makes the figures less certain. The ONS also says the very richest households can be missed, and it has suspended the survey's official quality stamp while it works to improve it.
“held 10% of all household wealth in Great Britain, which was the same as the proportion held by the least wealthy 50% of households combined”
Office for National Statistics·Household total wealth in Great Britain: April 2020 to March 2022Official statistics · 24 Jan 2025 ↗ - WT-03Mixed
“A 1% yearly tax on fortunes above £10 million would raise about £10 billion a year.”
That is an estimate the IFS reports from the Wealth Tax Commission, using 2016-18 data, and it assumes people do not change what they do. The IFS says the real amount would be significantly lower once people build up less wealth, avoid the tax or leave, and how much lower is very uncertain.
The same estimate said a 1% tax starting at £1 million would raise £33 billion a year, again before any change in behaviour. The IFS warns against a yearly wealth tax and says it would be better to fix existing taxes such as capital gains tax and inheritance tax. It also says valuing assets like private businesses every year would be a huge job.
“£10 billion if applied above a threshold of £10 million, before allowing for any behavioural response to the tax”
Institute for Fiscal Studies·Options for tax increases (IFS Green Budget 2025, chapter 4)Independent research institute · 13 Oct 2025 ↗ - WT-04False
“A UK wealth tax would raise more than £250 billion every year.”
This mixes up two different taxes. The £250 billion figure is for a one-off tax, paid over five years, on wealth above £500,000. The same study found that a yearly tax of 0.17% on wealth above £500,000 would raise about £10 billion a year, before running costs.
The one-off design charges 4.8% in total, which works out at about 0.95% a year for five years. A one-off tax is charged once, on wealth people already have, so it is harder to dodge. The IFS says this could work well in theory, but only if people believe it really will not be repeated.
“an annual wealth tax charging 0.17 per cent on wealth above £500,000 could generate £10 billion in revenue, before administrative costs”
Institute for Fiscal Studies (Fiscal Studies)·Revenue and distributional modelling for a UK wealth tax (Fiscal Studies, Special Issue on a Wealth Tax)Independent research institute · 25 Oct 2021 ↗Further sources for this card
- WT-05True
“Switzerland has taxed wealth every year for centuries, and raises more from it than any other rich country.”
Confirmed: Swiss cantons (regions) have taxed wealth since the early 1700s, and today the tax is paid every year. In 2014, wealth taxes brought in 3.3% of Switzerland's tax revenue, the biggest share of any OECD country.
The Swiss tax is not only for the very rich. In 2014, tax-free allowances ranged from CHF 25,000 to CHF 200,000 depending on the canton. Between 2001 and 2011, about 30% of taxpayers in the canton of Bern paid it. So it is a very different design from a tax that starts at £10 million.
“wealth taxes loom largest in Switzerland (3.3% of tax revenue)”
National Bureau of Economic Research·Taxing Wealth: Evidence from Switzerland (NBER Working Paper 22376)Independent research institute · 1 Jun 2016 ↗ - WT-06Mixed
“Wealth is hardly taxed at all in the UK.”
The UK has no yearly tax on a person's total wealth, but it does tax wealth in other ways, such as stamp duty, capital gains tax and inheritance tax. It also raises more from property taxes than most rich countries: 11% of all its tax revenue in 2022, about £100.6 billion, the 3rd-highest share of 38 OECD countries.
Property taxes include council tax and business rates, which ordinary households and shops pay, so they are not just a tax on the rich. The IFS points to gaps in other taxes on wealth. From 2026-27, some business owners selling up pay 18% capital gains tax, and gains on assets still held when someone dies pay no capital gains tax at all.
“Higher revenues from taxes on personal income, profits & gains and property taxes.”
OECD·Revenue Statistics 2024 - the United KingdomIntergovernmental body · 19 Nov 2024 ↗ - WT-07True
“Most countries that tried a wealth tax have scrapped it.”
Confirmed: 12 OECD countries had a yearly wealth tax in 1990, but only four still charged one on individuals in 2017. The IFS also says most rich countries that had one have dropped it.
The OECD says countries often dropped them because of worries about harm to the economy and the cost and difficulty of running them, and because they did little to narrow the gap between rich and poor. The IFS adds that big tax breaks and exemptions meant they raised little money for the trouble they caused. The OECD says a wealth tax has a stronger case in countries that tax savings income and inheritances lightly.
“While 12 countries had net wealth taxes in 1990, there were only four OECD countries that still levied recurrent taxes”
OECD·The Role and Design of Net Wealth Taxes in the OECD (OECD Tax Policy Studies No. 26): SummaryIntergovernmental body · 12 Apr 2018 ↗Further sources for this card
- WT-08Mostly true
“Wealth taxes raise hardly any money.”
Mostly right: the OECD says that, with a few exceptions, wealth taxes have raised very little. In 2014, they brought in less than 1% of tax revenue in Norway (0.76%), France (0.53%) and Spain (0.33%).
Switzerland is the big exception, at 3.3% of its tax revenue, but its tax also reaches many middle-class people. The amount depends on the design. For the UK, the IFS reports an estimate that a 1% tax on wealth above £10 million could raise £10 billion a year before people change their behaviour.
“The revenues collected from net wealth taxes have also, with a few exceptions, been very low.”
OECD·The Role and Design of Net Wealth Taxes in the OECD (OECD Tax Policy Studies No. 26): SummaryIntergovernmental body · 12 Apr 2018 ↗ - WT-09Mixed
“A wealth tax would just drive rich people to move away.”
Some rich people do move. When Spain brought back its wealth tax, every region charged it except Madrid, and some wealthy people moved between regions to pay less. The income tax lost through these moves was six times the wealth tax lost. But in Switzerland, moving explained only about a quarter (24%) of how reported wealth changed when tax rates changed.
In Switzerland, a 1 percentage point cut in a canton's wealth tax raised reported wealth by at least 43% after six years. Rising house prices explained 21%, and much of the rest seemed to be people hiding wealth, because banks did not report savings to the tax office. Both studies looked at moves between regions of one country. The OECD advises having others report people's wealth to the tax office, and countries sharing information, to make hiding harder.
“wealth tax mobility responses generate losses to personal income tax revenues that are six times larger than the direct losses to wealth taxes”
American Economic Association·Wealth Tax Mobility and Tax Coordination (American Economic Journal: Applied Economics)Peer-reviewed research · 1 Jan 2025 ↗ - WT-10Mostly true
“A 2% wealth tax is really like a 50% tax on what your savings earn.”
True if the savings earn 4% a year: a 2% wealth tax would then take half of that return, on top of existing taxes on investment income and gains. If savings earn more than 4%, the tax takes a smaller share, and if they earn less, a bigger one.
A wealth tax is charged on the whole pot each year, not on what it earns, so small-sounding rates can bite hard. It also means people whose wealth earns very high returns pay a smaller share of those returns. That is one reason the IFS and the OECD prefer well-designed taxes on income from savings and on gains.
“A 2% wealth tax would effectively represent a 50% tax on investment returns, on top of capital taxes that are already in place.”
Institute for Fiscal Studies·Options for tax increases (IFS Green Budget 2025, chapter 4)Independent research institute · 13 Oct 2025 ↗Further sources for this card
- WT-11Mostly false
“A wealth tax would hit ordinary families' homes and pensions.”
Not with a high starting point like the £10 million suggested for this debate. Even to be in the richest 1% of British households, you need about £3.1 million (£3,121,500), counting homes and pensions. So at least 99 in every 100 households would pay nothing.
It depends on the design. The IFS says taxing millionaires, taxing billionaires and taxing ordinary people's homes and pensions are very different things. A low starting point, like those in Switzerland, would reach many middle-class families.
“The wealthiest 1% of households had wealth of at least £3,121,500.”
Office for National Statistics·Household total wealth in Great Britain: April 2020 to March 2022Official statistics · 24 Jan 2025 ↗ - WT-12Mixed
“Wealth taxes make people save and invest less.”
The evidence is split. A study in Norway found people who had to pay more wealth tax saved more, not less: each extra krone of wealth tax led to 3.76 kroner more saving a year, mostly paid for by earning more from work. But a study in Denmark found wealth taxes cut how much wealth people built up, with bigger effects on the very rich.
A tax on savings makes saving less rewarding, but it also leaves people poorer, so some work and save more to make up for it. The Danish study used Denmark's wealth tax cuts between 1989 and 1997, when it was scrapped. The IFS says a yearly wealth tax would penalise saving.
“wealth taxation causes households to save more”
Oxford University Press (The Review of Economic Studies)·Wealth Taxation and Household Saving: Evidence from Assessment Discontinuities in Norway (The Review of Economic Studies)Peer-reviewed research · 15 Oct 2024 ↗
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