The Wealth Tax Commission has released a report recommending a one-off wealth tax in the UK to raise revenue and repair public finances in response to the COVID-19 pandemic.
The one-off wealth tax on millionaire households is estimated to raise up to £260bn over five years, if the threshold was set at £1m per household with a levy of 1% payable on the value of their assets above this level. But what does this mean for you?
“The Wealth Tax Commission suggests that the tax would apply to a person’s total wealth – including their home and any other properties, pension pots, business and financial wealth. Debts including mortgages would be deducted. One-off taxes have been used after major crises before, including France, Germany and Japan after the Second World War, and in Ireland after the global financial crisis,” says Granville Turner, Director at company formation specialists, Turner Little.
The Wealth Tax Commission, founded in April 2020, is a body made up of academics, policymakers and tax practitioners. It was tasked with considering the principles, design and delivery of a wealth tax for the UK. The report that resulted not only considered a one-off wealth tax, but also an annual wealth tax, whilst concluding that a one-off tax would be fair, efficient and difficult to avoid.
“On one side, the UK government borrowing needs to be paid for, but on the other, the government will need to be wary of doing anything that could inhibit growth and investment – so the answer isn’t always as simple as it seems. However, the future of tax is up for debate and it’s clear that change is on the horizon, but the UK government needs to ensure this is fair, proportionate and recognises the importance of economic growth,” adds Granville.
If you are concerned about the impact of a wealth tax on your assets, or are looking for advice on asset protection, get in touch with us today.