The Wealth Tax Commission (WTC), has published its recommendations on whether the UK should have a wealth tax. The proposals would affect anyone with assets over £500k; this would include owners of private businesses, savings, pensions, and people with who have this amount of capital in a property.
Jo Bateson, Partner with KPMG UK’s Family Office & Private Office team, comments: “The decision of whether to introduce a wealth tax in the UK should not be taken in isolation and instead should be part of a broader review of how the UK taxes capital. Introducing a wealth tax without reform to capital gains tax and inheritance tax would potentially make the UK’s overall tax rates on capital one of the highest countries in the world.”
“If a wealth tax is implemented without relief for business assets, this could have a significant impact on family business owners who are typically not sufficiently wealthy to fund this tax independently. This could mean that the business would need to fund the wealth tax, which would have implications for investment and growth for the future.”
“With all wealth taxes, valuation is key and even on more straightforward assets, such as property, valuation can be subjective. For a wealth tax to be successful it does need to be administratively simple and not costly to comply with.”
“Given Brexit is fast approaching and the UK wants to be globally competitive, a wealth tax does not feel like the answer. Having said all of this, the tax revenues quoted by the Wealth Tax Commission on a one-off wealth tax are staggering at hundreds of billions of pounds. Given the Chancellor has a number of difficult choices ahead, he may decide that this is his least worst option, particularly given its apparent popularity with the general public.”