News | December 10, 2020

Emergency wealth tax ‘could wipe out UK’s pandemic bill’

The Wealth Tax Commission’s Report is extensive, thoroughly researched and well-argued but will not be well received by the majority of high-net worth individuals and many Conservative voters. The proposed threshold of £500,000 is extremely low, given property prices, and would effectively make this a standard UK tax for a lot of people, rather than a tailored tax for the very wealthy. One reason for the unpopularity of the proposals will be its application in addition to inheritance tax, making an effective double tax on wealth. Non-domiciled individuals will be reading these proposals with interest, and for those who have only recently come to the UK, there will be an incentive to emigrate and/or withdraw investment. It is proposed that those who have been resident in the UK for more than three years will become subject to the tax, and we may well see such cases in the New Year, particularly given the proposal that the tax (if the government decide to pursue it) should be announced with immediate effect and without public consultation (to disarm forestalling arrangements). Finally, there is a mismatch on timing; arguably there is appetite now for the taxpayer to support this whilst Covid experiences are raw and real but at the moment interest on government debt is low so query whether the taxpayer’s money could be better spent in the real economy to help kickstart recovery.