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. What would it take to eradicate child poverty in Scotland?

    Delivering on the First Minister’s commitment to ‘eradicate’ child poverty seems a long way off.
  2. A wind farm in the hills to the south of Glasgow, Scotland.

    Apathy and opposition: Understanding the real threats to net zero

    Climate action is under siege from populist and far-right actors. Delivering under that pressure demands fresh confidence and commitment from government. 
  3. A flood warning sign, on a closed country road next to water logged fields in the Avon Valley, Hampshire, England

    Adapt or die: Why progressives need to deal with extreme weather

    The impacts of extreme weather are already directly affecting people and communities across the UK. We lack ways to deal with this.