Wealth taxes could raise £10bn to help plug Tory budget hole, say economists

3 comments

1. Fair enough. We’ve had a party who’ve spent the last 14 years redistributing public money to their mates and donors. It’s about time we clawed some of that back and invested it in things we actually use.

   If we have to go after CGT and IHT to raise the money to sort out their mess, then so be it.

2. “Both taxes, he said, currently include reliefs “that are hard to justify”, such as the way pensions pot are exempt from inheritance tax at death.”

   Surely a pension pot needs to be exempt from inheritance tax at least for when a partner dies and passes it on to a life partner?

   Going to cause big problems if not.

3. Love that whenever wealth taxes come up it’s tweaks to IHT or capital gains taxes. How about actually proposing a taxes that will consistently tax wealth. 1%-2% on property worth >£5m would be a game changer. Property taxes have been proved viable and functional in the US (in the US average property tax is a little over 1%, taxes don’t map neatly but it shows functionality) anyone with a property worth >£5m is by that alone in the top few percent in the country and anyone such a property will have ample other wealth/income (that’s above the “my nan bought a terraced house is Islington in 1964 but doesn’t own anything else of value and lives on her post office pension argument”).

   The Duke of Westminster successfully avoided £3.5bn in IHT on death cos of trust laws (if we tweak trust laws they’ll just use different side steps, and obviously our Charles didn’t pay a penny cos laws don’t apply to him). Duke of Westminster has about 9.5bn worth of property, 1% tax would draw £95m/pa alone (he draws rents from across Mayfair and Belgravia on his empire every year, he’s plenty liquid enough to pay!).

   What’s needed isn’t tweaks to IHT that will hit doctors and SME owners hard, but leaving the 1% laughing, but a revolution in how we view and tax wealth. Property is the easiest to tax and set at the right level, people will pay it before leaving The Cotswold, Belgravia or Surrey just as they pay it in the Bay Area, LA and New York. Those with sprawling U.K. property empires aren’t going to sell up cos they will just be slightly less profitable.

   To play nice, people who can’t pay it can have an option to let the bill role over till sale or death with interest applied at base rate + 2% (this isn’t a let off, compound interest isn’t a fun force to work against, anyone with financial literacy knows this – especially those selling equity release).