Reforms to the taxation of wealth

The calculator below shows how much revenue could be raised from reforming the taxation of wealth. The table beneath provides more details on the reform proposal and links for further reading.

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The table below provides details for the reforms proposed, the standalone revenue raised (i.e. not accounting for the interactions modelled in the above simulator), and where further evidence on the revenue raised and details of reform can be found.

Reform	Policy details	Revenue (standalone, 2022)	Evidence
Capital Gains Tax: equalise rates	Equalisation of Capital Gains Tax (CGT) rate with tax on income. Reintroduction of indexation (don't tax inflation). Removal of "death uplift" - current situation where tax is wiped out if you can afford to hold assets until you die. Averaging of gains over holding period, to smooth out 'lumpiness' - prevents someone with persistently low income but one-off high gains from being pushed into a high tax bracket.	15.6bn	How much tax do the rich really pay?, Capital Gains and UK Inequality, The taxation of capital gains: principles, practice, and directions for reform
Non-dom regime: abolish or restrict	Abolition of the non-dom regime, which allows some people to not pay UK tax on overseas returns from investment. Or: Restriction of the remittance basis to first 3y of residence. Or: Restriction of the remittance basis to first 5y of residence.	3.6bn Or: 2.6bn Or: 1.8bn	Reforming the non-dom regime: revenue estimates
National Insurance: extend to investment income	Extend National Insurance Contributions (NICs) to be paid at the same rate on income to landlords, to shareholders and from other investments as currently paid on income from work.	9.6bn	Fixing the gaps in National Insurance: A better way to fund social care
National Insurance: extend to pensioners	Extend National Insurance Contributions (NICs) to people over pension age on their income from current work and from investment, but not including their pension income.	1.6bn Or: 3.6bn, if first extending NICs to investment income	Fixing the gaps in National Insurance: A better way to fund social care
National Insurance: remove cap for higher earners	Removing the "Upper Earnings Limit" (UEL), which means that National Insurance Contributions (NICs) are currently paid at a lower rate after around £50k in income, dropping from 12% to 2% (currently, until April 2023, this is 13.25% to 3.25%).	18.2bn Or: 20.9b,n if first extending NICs to investment income	Fixing the gaps in National Insurance: A better way to fund social care
Annual Wealth Tax: wealth above £10m	Tax on the value of individual wealth in excess of £10m. Wealth includes net value of all assets, so includes pensions, property (accounting for share owned), and subtracts debts (including mortgages). Tax applies only to the part of wealth in excess of £10m, so someone with £11m in assets would pay £10k in tax.	1% tax raises 11.1bn	A wealth tax for the UK, Revenue and distributional modelling for a wealth tax, Frequently Asked Questions
Inheritance tax: remove reliefs	Remove Agricultural Property Relief (APR): allows agricultural land to be passed on tax-free. Remove Business Property Relief (BPR): allows business wealth to be passed on tax-free. Remove Pensions Relief: allows people to pass on pension pots tax-free if they can afford not to start taking money from the pension before death.	3.0bn	Revenue and distributional modelling for a wealth tax (Table 6)
45p rate: start at £140k	Reduce the income threshold at which the 45p additional rate begins to apply Note: this policy has been added because it has been discussed in the media as a possible reform in the Nov 2022 budget, so it seemed sensible to examine what it might raise.	0.3bn	Analysis using Survey of Personal Incomes
Notes: 1. Figures in the table are based originally on the Evidence papers linked. They have been uprated from the original calculation year by the growth in GDP (or forecast GDP for "five years time"). If existing trends continue, this is likely to underestimate the revenue raised, since these taxes are based on private wealth, which has been growing faster than GDP over the past few decades. Indeed, over the period that we can observe, growth in capital gains (for example) has substantially exceeded the growth rate of GDP. 2. Revenue estimates are, currently, a mix of "static" and "post-behavioural" calculations. Non-dom reform accounts for behavioural responses. This wealth tax simulator provides more detailed, post-behavioural calculations for an annual wealth tax. Other reforms currently don't account for behavioural responses. This simulator will expand to account for more reforms and more responses over time. 3. Tax interactions are incomplete. The simulator currently accounts for the effects any reform to the structure of National Insurance Contributions on other reforms to National Insurance Contributions. It also accounts for changes to National Insurance Contributions and Capital Gains Tax on the revenue raised from non-doms. However, other taxes interactions are not currently accounted for. For example, the introduction of an Annual Wealth Tax would also affect the revenue from non-doms.