Professional Adviser quotes Julia Cox on the potential for a future UK 'wealth tax'

Prime Minister Keir Starmer’s refused to rule out a wealth tax at a recent Prime Minister's Questions (PMQs)

When Starmer was asked twice on Wednesday 9 July by Conservative leader Kemi Badenoch if he could rule out a tax on the wealthiest, he avoided the questions in the exchange. In the exchange, Badenoch accused Starmer of "flirting" with calls for a wealth tax and asked him to rule it out.

The Prime Minister also refused to say if he would extend a freeze on income tax and national insurance thresholds. Conversations around a potential wealth tax have been raised again amid continued speculation around how the Labour government might raise revenue.

Julia Cox, Partner in our Private Client team, provides comment on the topic for Professional Adviser. She argues that the fact that there has been no ruling out of a wealth tax "is telling". Julia explains:

While a wealth tax might play well with some voters and offer a short-term revenue boost, the subsequent administrative burdens are significant, and the behavioural consequences could be even greater.

Julia goes on to highlight the impact of the non-dom changes, with many high-net-worth individuals choosing to leave the UK or "not come here at all". She warns that "a wealth tax may well only sharpen that trend".

There's been no ruling out of income tax rises either, which may now be on the table if Labour wants to fund its programme credibly. Equalising capital gains or cutting back on higher rate pensions relief could be in the mix.

"However, meaningful tax reform takes time and care, and a rushed Autumn Budget, shaped more by revised funding requirements than careful design, risks unintended consequences.

Read the full article in Professional Adviser here (subscription required).