Taxing Extreme Wealth in the United Kingdom: Revenue Estimates for a 2% Minimum Tax on Ultra-High-Net-Worth Households

The super-rich in the UK, like in many OECD countries, pay lower effective tax rates than ordinary workers. At the same time, the wealth of the richest 300 households has increased from around 5% of GDP in 1989 to 16% today. This report presents a response to these challenges: a minimum 2% average annual tax on the total wealth of households with more than £100 million in wealth. The tax would raise around £10 billion in 2026, equivalent to 0.3% of GDP and almost one-third of the projected government current budget deficit. As only the richest 1000 households would be taxed, the usual criticisms against historic wealth taxes – administrative infeasibility, tax evasion, valuation problems, illiquid assets and a dampening of business innovation – do not hold. The proposal would include a 10 year post-emigration period under which households would remain liable for the tax, building on recent similiar changes to inheritance taxes. Given the small numbers of households involved, the tax could be implemented quickly to stop preemptive flight. Revenues remain substantial under a range of alternative assumptions regarding the tax model and behavioural responses.