Is a Wealth Tax coming to the UK?

The Office of National Statistics (ONS) reported an estimated budget deficit of £70.3 billion in the FYE March 2025. The question of how to raise additional revenue without derailing economic growth is front and centre.

Much of the public and political discourse has circled around the idea of a Wealth Tax, particularly as pressure mounts for the new Labour government to demonstrate fiscal responsibility while funding its priorities.

Rachel Reeves has repeatedly said there will be no “Wealth Tax” in the traditional sense: no new annual levy on net wealth, no French-style tax on fortunes. Labour also promised not to raise Income Tax, National Insurance or VAT. So how will they raise the funds they need for public services and investment? The reality is that wealth can be taxed without being called a ‘Wealth Tax’ at all.

Could the Autumn Budget introduce a series of “stealth” or indirect wealth-based reforms?

What can we expect from the Autumn Budget?

Rather than implementing a formal Wealth Tax, I expect Reeves to take a more nuanced approach. Possible measures being discussed (and in some cases already trial-ballooned) include:

• Freezing Income Tax and National Insurance thresholds: Already locked in until 2028, this could be extended, taking more taxpayers into higher bands. While the concept of Wealth Tax is to tax the wealthy, many low and middle-income earners are paying more tax due to fiscal drift. For example, the current pension triple lock ensures that State Pension increases in line with inflation. This in turn has resulted in more pensioners paying tax than there would have been if the personal Income Tax threshold also increased in line with inflation.
• National Insurance on landlords: Labour’s manifesto pledged no increases in Income tax or National Insurance on “working people” meaning earnings from employment and self-employment specifically. Hence, tax reform proposals could be underway in respect of investment income such as rental income.
• Capital Gains Tax (CGT): While full alignment with Income Tax rates seems unlikely, increases to top-end CGT rates or reductions in allowances are plausible.
• Pension Tax reliefs: Reforms to limit tax-free lump sums or restrict higher-rate reliefs for high earners may be on the cards.
• ISA reform: As the Chancellor wants to encourage savings, it has been mentioned that she will not reduce the £20,000 ISA limit. Nevertheless, the government is actively exploring ISA structure reform to rebalance cash versus equities holdings and stimulate more retail investment.
• Inheritance Tax (IHT): Recent reports indicate the Chancellor is weighing whether to soften some of these IHT changes already made, especially those impacting wealthy individuals and foreign investors, including transitional reliefs and how global assets in trusts are taxed.
• Corporation Tax tweaks: While politically sensitive, further changes to reliefs or minimum effective tax rates are possible, particularly for large multinationals.
• Mansion tax: A potential wildcard. This is a proposed targeted levy on properties worth over £2 million. While not yet formal policy, it remains a live option due to its simplicity and media appeal. While changes to Stamp Duty Land Tax (SDLT) reliefs for second homes, foreign buyers, or non-residents are low-hanging fruit.

None of these measures will be labelled as “Wealth Tax,” but collectively, they serve the same fiscal purpose: to target wealthier individuals and entities without triggering a public backlash or widespread tax flight.

Wealth Tax around the world

Some countries, such as Switzerland, Spain and Norway, levy Wealth Tax. However, majority of OECD nations known for their high standard of living; Germany, Sweden, Denmark, Finland and Luxembourg abolished Wealth Taxes because either it was found to be unconstitutional, made the country a less competitive place for investment, or they found the revenue generated was much lower than the original projection.

Understanding how other countries have approached Wealth Tax provides important context. The table below outlines the current global landscape:

What should advisers and taxpayers do?

• Model different CGT scenarios now rather than assuming current rates will last.
• Consider gifting or trust structures before potential IHT relief changes.
• Review pension planning, especially for higher earners.
• Watch out for further consultations—Labour may prefer to avoid sudden “surprise” budgets but will likely signal intentions first.

Conclusion

Due to the backlash from the recent changes of the non-dom regime, we expect that Reeves will avoid imposing a Wealth Tax, but the direction of travel is clear – raising more from wealth, capital, property and pensions while keeping Income Tax and VAT stable.