PRESS RELEASE : Five policies that could raise up to £37 billion in tax [October 2022]
The press release issued by Tax Justice UK on 25 October 2022.
The government could raise up to £37 billion in taxes on wealth, analysis by Tax Justice UK has found.
It comes as the new Chancellor, Jeremy Hunt, looks to find ways to raise taxes ahead of next week’s Halloween Budget.
Tax Justice UK Head of Advocacy, Tom Peters, said: “Tax is about political choices. At a time when most people are being hit hard by the cost of living crisis it would be wrong to cut public services further.”
“The wealthy have done really well financially in the last few years. The Chancellor should protect public spending by taxing wealth properly.”
If he chose to, the Chancellor could:
- Equalize capital gains with income tax rates, raising up to £14 billion a year
- Apply national insurance to investment income, raising up to £8.6 billion a year
- Apply a 1% wealth tax on assets over £10 million, raising up to £10 billion a year
- End the inheritance tax loopholes that benefit the already wealthy, raising up to £1.4 billion a year.
- Reform the rules on non-dom status, raising up to £3.2 billion a year
The revenue figures are estimates based on research from the government, academics and think tanks. The total figure might change depending on exact behavioural responses.
Tax Justice UK policy recommendations:
Increase Capital Gains Tax to align rates with Income Tax. This would have the positive effect of simplifying the tax system, to treat all forms of income in the same way. There is no obvious reason why someone going to work should pay more tax on their wages than someone living from their investments, for example. According to the Office of Tax Simplification, who advocated for this policy change in 2020, it could also raise up to £14bn a year.
Extend National Insurance to investment income. Instead of focusing on the rates of National Insurance, the government should expand the tax base, by applying National Insurance to income from investments, such as dividends from shares, rent from property, and interest on savings . This would equalise and simplify the treatment of different types of income under the taxation system, and ensure that income from wealth is taxed at the same rate as earnings from work. It would raise around £8.6bn.
Introduce a 1% annual wealth tax on net assets over £10m. A small wealth tax applied to those at the very top of the distribution could raise nearly £10bn from 0.04% of the population – those who have benefited enormously from structural economic changes over the last decade. This tax would help to rectify some of the issues with our existing wealth taxes, which are often avoided by the very richest.
Scrap or reform Business Relief and Agricultural Property Relief on Inheritance Tax. There is evidence that these inheritance tax reliefs are being used as loopholes by a small minority of the very wealthy to avoid paying the appropriate inheritance tax on their assets. Abuse of Agricultural Property Relief is likely pushing up the price of agricultural land for genuine commercial food production. Scrapping these could raise over £1.4bn a year, or the Resolution Foundation has proposed reforms to prevent them being exploited, generating a smaller saving.
Abolishing the non-dom regime. Non-domiciled residents in the UK (‘non-doms’) receive at least £10.9 billion in offshore income and capital gains each year, which they are not required to report to HMRC or pay tax on in the UK. Taxing this income would raise more than £3.2 billion in additional tax revenue each year and also remove the current disincentive to invest in the UK, according to research by academics Dr Andy Summers and Dr Arun Advani.
