A new wealth tax targeting the UK‘s richest households could generate £10 billion a year for the Treasury, according to economists urging Prime Minister Andy Burnham to include the measure in his plans to make the tax system fairer and strengthen public services.
The proposal, put forward by Gabriel Zucman of the Paris School of Economics and Ben Tippet of King’s College London, recommends a 2% minimum annual tax on households with wealth exceeding £100 million.
The academics estimate the levy would affect fewer than 1,000 of the UK’s wealthiest households while raising around £10 billion annually.
Burnham has previously suggested a wealth tax could form part of his forthcoming 10-year economic plan, although advisers have also considered aligning capital gains tax rates more closely with income tax to increase government revenues.
The Prime Minister is expected to outline his tax and spending plans later on Tuesday.
Speaking last week, Burnham stressed that any tax changes should promote fairness without creating division.
“I do believe we need a greater sense of fairness and people feeling things are being done in the right way, but at the same time I don’t want to be perceived as someone who is coming in with grudges and agendas and demonise one group.”
Under the proposal, HM Revenue & Customs would calculate the total wealth of the UK’s richest families, including property, private businesses, pensions, land, artwork and charitable assets under their control.
The report said: “The objective is not to create a broad-based wealth tax affecting millions of households but rather a focused tax on extreme wealth that can make billionaires pay the same tax rates as the rest, raise meaningful revenues and dampen runaway inequality.”
Zucman said the policy could be introduced relatively quickly because it targets only a very small number of households.
“Given the small numbers of households that would be taxed, the UK government could implement this quickly.”
The report argues that existing tax rules allow many ultra-wealthy families to reduce their tax liabilities through holding companies, charitable trusts and transfers between family members.
Tippet said: “The report shows that a well-designed minimum tax on the very wealthiest households is a realistic, targeted reform that would make the UK’s tax system fairer while raising substantial revenues.”
He added that concerns commonly associated with wealth taxes, including valuation difficulties, administrative complexity and impacts on entrepreneurs, “do not hold” because the proposal applies only to a limited number of households.
The plan also recommends preventing wealthy individuals from avoiding the tax by moving overseas, requiring them to continue paying it for at least 10 years after leaving the UK.
Support for wealth taxes has grown internationally as governments seek ways to address widening inequality.
Countries including Germany and Brazil have previously backed proposals for a global minimum tax on billionaires, while New York City Mayor Zohran Mamdani has introduced a tax on second homes and called for a broader wealth tax.
The report argues that previous wealth taxes introduced across Europe failed largely because they applied to too many taxpayers and contained extensive exemptions.
“Wealth taxes work best when they focus on the very wealthiest households, apply to a broad asset base and are supported by strong administrative enforcement,” the report concluded.