Responding to general speculation that the 2025 Autumn Budget will need to include tax increases following the UK Government’s recent reversal of plans to save money through welfare reform the Institute for Fiscal Studies (IFS) pours hot water on the idea of an annual wealth tax. ‘Taxing the same wealth every year would penalise saving and investment’ suggests Stuart Adam Senior Economist at the IFS. Adam highlights practical difficulties with implementation including valuation of assets and having the necessary ‘administrative apparatus’ to carry out those valuations (presumably on an almost constant basis) concluding: ‘There are strong reasons to radically reform how we currently tax the sources and uses of wealth; this includes reforming capital income taxes in order to properly tax high returns. An annual wealth tax would be a poor substitute for doing that.’
John Barnett Partner at Burges Salmon points out...
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Responding to general speculation that the 2025 Autumn Budget will need to include tax increases following the UK Government’s recent reversal of plans to save money through welfare reform the Institute for Fiscal Studies (IFS) pours hot water on the idea of an annual wealth tax. ‘Taxing the same wealth every year would penalise saving and investment’ suggests Stuart Adam Senior Economist at the IFS. Adam highlights practical difficulties with implementation including valuation of assets and having the necessary ‘administrative apparatus’ to carry out those valuations (presumably on an almost constant basis) concluding: ‘There are strong reasons to radically reform how we currently tax the sources and uses of wealth; this includes reforming capital income taxes in order to properly tax high returns. An annual wealth tax would be a poor substitute for doing that.’
John Barnett Partner at Burges Salmon points out...
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