Wealth Tax to Pay Coronavirus Costs Debts
Published / Last Updated on 06/07/2020
A recent poll by You Gov found that over 60% of the population supported a ‘wealth tax’ tax on those with assets in excess of £750,000, excluding pensions and the value of their residential property to help pay for coronavirus costs.
This weekend, Labour’s Shadow Chancellor Annelise Dodds supported a similar plan as Chancellor Rishi Sunak gears up for his Summer Statement (mini-budget) on Wednesday 08th July 2020. This will be his first since coronavirus lockdown.
We believe a ‘wealth tax will hit this country sooner rather than later given that many countries around the World already levy a wealth tax on people’s assets.
- Argentina – 0.75%pa on assets over c£15,000
- Canada – 0.2%pa to 0.5%pa on assets over c£1.8m
- France – 0.5%pa to 1.5%pa on assets over c£800,000 where total assets exceed £1m
- Holland – on assets over c€3m: 0.58%pa on assets €0-€71,000, 1.34%pa on assets €71,000-€989,000 and 1.68%pa on assets €989,000+
- Italy – 0.75%pa on assets held outside Italy
- Norway – 0.7%pa local taxes and 0.15%pa national taxes, for assets in excess c £150,000 where 25% of main residence, 90% of other property and 75% other investments are taxed
- Spain – 0.2%pa to 3.75%pa on assets over c€700,000 in excess of a main residence allowance of €300,000
- Switzerland – 0.13%pa to 0.94%pa on assets over c£80,000.
The UK already, indirectly has a ‘wealth tax’ called Annual Tax on Enveloped Dwellings (ATED) where residential property owned inside a corporate structure such as a limited company (to avoid stamp duty) is taxed each year based upon its value:
- £500,000 to £1m = £3,700pa tax
- £1m to £2m = £7,800pa tax
- £2m to £5m = £25,200pa tax
- £5m to £10m = £58,850pa tax
- £10m to £20m = £118,050pa tax
- +£20m = £236,250pa tax
It is not a huge 'leap of faith' to use this model to tax all wealth in excess of a certain figure excluding your main residence and/or pension funds. It may not be this time, but we do expect a ‘wealth tax’ at some point and in particular when Labour get into power which they eventually will do so again.
