Wealth Tax

Thank you for contacting me about wealth distribution in the UK and a wealth tax.

Analysis from the Office for National Statistics shows that income inequality has remained broadly stable over the last 14 years. For the financial year ending 2021, income inequality in the UK fell slightly, following a decade in which income inequality had remained relatively stable.

As you have mentioned, the UK does not have a comprehensive, single wealth tax, but it does have several taxes on assets and wealth. These taxes operate across many different economic activities, including the acquisition, holding, transfer and disposal of assets, and income derived from assets. The UK’s taxes on wealth are broadly equivalent to those of other G7 countries.

The UK’s progressive income tax system means the top 1 per cent of income taxpayers are projected to have paid over 29 per cent of all Income Tax, and top 5 per cent are projected to have paid over 50 per cent, in 2019-20, the most recent year for which data is available.

I welcome measures announced in the budget aimed at reducing tax avoidance. Under new plans, the Government will double the maximum sentences for the most egregious cases of tax fraud from 7 to 14 years, and will consult soon on the introduction of a new criminal offence for promoters of tax avoidance who fail to comply with a legal notice from HMRC to stop promoting a tax avoidance scheme. The Government is also investing a further £47.2 million to improve HMRC’s capability to collect tax debts, including supporting those who are temporarily unable to pay.

Thank you again for taking the time to contact me.