Legal News | 17.12.20
A new wealth tax for the UK?
On 9 December 2020 the Wealth Tax Commission published a report which proposes the introduction of a one-off wealth tax payable on net individual wealth over the value of £500,000 at a charge of 1% per year for five years.
The report states that this new wealth tax could raise £260 billion for public finances which have been drastically depleted as a result of the coronavirus pandemic.
The report states that the wealth tax could apply to an individual’s assets above the threshold of £500,000 or a couple’s assets above £1million. The proposed wealth tax is to be set against all assets that an individual owns, including pension funds, businesses and the main home after the deduction of mortgages and other debts. Furthermore, it is proposed that an individual’s assets are valued using their open market value.
The report recommends that the one-off wealth tax will be payable by UK residents, including those who are non-domiciled and recent emigrants, who have a personal wealth that is above the suggested thresholds.
The Wealth Tax Commission, which is made up of academics, tax professionals and barristers, has suggested that this one-off wealth tax is preferable to increasing taxes on income and spending. They consider a wealth tax of this kind to be more efficient, fair and tough to avoid.
The report suggests that those who are ‘asset rich but cash poor’ could have their payments deferred.
The Government will now have to decide how they move forward with these recommendations which are timely as the Chancellor is currently considering whether to make changes to the current Capital Gains Tax regime.
Although we will need to wait to see whether any new tax measures are introduced; if you need advice in the meantime regarding tax planning, please do get in touch with your usual Wansbroughs contact or email wealth@wansbroughs.com.
