A Wealth of Difference: Reforming the taxation of wealth

Article

The UK is a wealthy nation but that wealth is very unevenly distributed. This has negative implications for both economic prosperity and justice. These issues are set to become more important as technological change, stagnating wages and rising house prices increase the income and gains that can be made from wealth.

The UK’s system of wealth taxation currently fails to tackle these issues. In fact, it frequently exacerbates them by creating opportunities for avoidance, distorting investment decisions, poorly capturing wealth transfers and undertaxing income from assets, particularly housing. This is unjust.

In this paper we make five recommendations which together amount to a transformation of the tax treatment of wealth in the UK. We recommend that all income from wealth is taxed under the income tax schedule; that inheritance tax is abolished and replaced with a lifetime donee-based gift tax; and that that non-domiciled status is removed and trusts are reformed to be more transparent. We also propose the reform of property taxes through the replacement of council tax with an annual property tax, and the replacement of business rates with a land value tax.

Related items

  1. One year in: the government is making decent down payments for the years ahead

    It’s fair to say it hasn’t been a straightforward first year for the government. 

  2. Britons back local leaders with fiscal firepower

    “Death and taxes,” they say, are life’s only certainties. But there’s a third - wherever taxes are controlled, power lies.

  3. Filling the funding gap: at what cost to Scotland’s public services?

    Last week the Scottish government published its delayed Medium Term Financial Strategy (MTFS) which ‘provides the economic, funding and spending outlooks for the financial years 2025/26 to 2029/30’ and ‘the Government’s fiscal strategy to…