Millionaire exodus or golden opportunity? Here’s what a wealth tax could mean for the UK
The UK government is rumoured to be considering implementing a wealth tax that would levy additional taxes on the richest of households, but could this policy work without causing the rich to flee British shores?
On Sunday 6 July, former Labour leader Lord Neil Kinnock suggested on Sky News’ Sunday Morning with Trevor Phillips that some in the government may be sympathetic to the levying of a wealth tax to bring additional revenue into the budget.
Kinnock said that a 2% tax on those with over £10 million in total assets could raise up to £11 billion for the Exchequer, while also signalling to the country that the government is one focussed on equity.
Downing Street has not ruled out the possibility of implementing a wealth tax, although it must be noted that Chancellor Rachel Reeves previously stated that such a tax would not be on the cards for this government.
However, with the government having been forced to backtrack on a number of cost-cutting measures, including cuts to spending across disability benefits and winter fuel allowance payments, a wealth tax would help to shore up an increasingly stressed budget without affecting the most vulnerable in society.
But can such a tax work in practice, and what effect would it have on the more than 3 million people worth over £1 million who live in the UK?
Where does a wealth tax work?
It is difficult to determine the effectiveness of a wealth tax in raising revenue, as the policy has seen mixed results where it has been deployed elsewhere.
In Norway, an effective wealth tax of up to 1.1% was implemented in 2023, consisting of:
- A municipal wealth tax rate of 0.525% on assets over NOK 1,760,000 (£128,426) for single/not married taxpayers and NOK 3,520,000 (£256,852) for spouses.
- A state wealth tax rate of 0.475% on assets over NOK 1,760,000 (£128,426) for single/not married taxpayers and NOK 3,520,000 (£256,852) for spouses. Where net wealth exceeds NOK 20,700,000 (£1,510,468), this rate rises to 0.575%.
According to a report from the Guardian in 2023, Norway’s wealth tax resulted in record numbers of wealthy Norwegians leaving the country after the tax was implemented, with many moving their assets to Switzerland.
On the other hand, Spain is an example of a European country which levies a wealth tax that brings in a significant stream of revenue to the government budget.
Its progressive wealth tax is levied on the top 0.5% of households in the country, with the rate ranging from 0.2% to 3.5% depending on the total value of assets you own.
In 2023, the country raised more than €620 million after implementing a temporary solidarity tax measure to temporarily remove exemptions on wealth taxes deployed by regional governments.
Tax Justice Network published a study in 2024 that argues copying this ‘featherlight’ tax on the super-rich could raise up $2 trillion globally.
It also estimated that after correcting for existing wealth taxes and potential migration responses, the United Kingdom could raise over £22 billion by implementing a progressive tax system similar to Spain.
Beware the ‘millionaire exodus’
A report published by Henley & Partners found that the UK was expected to see a net emigration of 16,500 millionaires in 2025, labelling this the ‘largest single-year exodus of millionaires ever recorded’.
Widely cited by publications across the UK, this report stoked fears of wealth flight, implying the mass departure of wealthy individuals from the UK.
As seen in Norway, wealth taxes can encourage super-rich residents to leave, moving their businesses and assets to other countries with more favourable tax regimes that better cater to those with high net wealth.
However, this concern over a ‘millionaire exodus’ in the UK has been challenged by Tax Justice Network, which noted that the 16,500 millionaires Henley & Partners say are expected to leave the UK comprise just 0.63% of the UK millionaire population, which is more than 3 million.
Polling by UK organisation Patriotic Millionaires published last month also contradicts fears of a wealth tax causing a millionaire exodus in the UK, showing that 80% of millionaires support a 2% tax on assets over £10 million.
Additionally, 72% of millionaires polled by the organisation think the government should raise taxes on the super-rich to reduce taxes on everyone else.
“Millionaires aren’t going anywhere — I know this because I am one; because this report claims only 0.6% are projected to leave; and because 81% of millionaires think it’s patriotic to pay their fair share,” said Patriotic Millionaires Member Julia Davies.
“These cynical efforts to prioritise the political and financial interests of those who benefit from extreme wealth should be dismissed so we can get on with focusing on the needs of ordinary families here in Britain.”
