How much money a 2% wealth tax on the UK’s richest would raise
Key Points
- A 2% minimum annual wealth tax on UK households worth over £100 million would raise £10.4 billion in 2026
- Fewer than 1,000 households would pay it, with administrative costs under 1% of revenues
- The wealth of the richest 300 UK households has grown from 5% of GDP in 1989 to 16% today
- Households would stay liable for up to ten years after leaving the UK to prevent tax driven relocation
- Revenues would grow to almost £18 billion annually by 2036
A minimum annual tax of 2% on UK households worth more than £100 million would raise £10.4 billion in 2026 while affecting fewer than 1,000 households, new academic research shows.
This is according to a new analysis by Ben Tippet (Lecturer in Economics and Wealth Inequality at King’s College London) and Gabriel Zucman (Professor at the Paris School of Economics and the University of California, Berkeley).
The pair propose that households holding more than £100 million pay a minimum effective tax rate equivalent to 2% of their total wealth each year, with any income taxes already paid deducted from the liability. Households that already pay the equivalent of 2% of their wealth in tax would pay nothing extra.
The duo estimate the measure would raise £10.4 billion in its first year, ten times the estimated savings from cutting the 2024/25 Winter Fuel Allowance and enough to reduce the UK’s projected current budget deficit by almost one third.
Revenues would grow over time, reaching almost £18 billion annually by 2036. Nearly half of all revenues would come from fortunes built primarily in finance, real estate and land.
The proposal lands as protesters urge Prime Minister Andy Burnham to include a wealth tax in his plans to make the tax system fairer and fund public services.
The richest 300 households
The research shows the wealth of the richest 300 UK households has risen from around 5% of GDP in 1989 to around 16% today, while these households often face lower effective tax rates than ordinary workers.
Tippet and Zucman argue that reforms to capital gains tax and inheritance tax cannot close this gap on their own. The super rich hold wealth in assets that they can accumulate for decades and borrow against without ever triggering a taxable event. Their proposal targets this directly by taxing the wealth itself.
“A minimum 2% tax on the total wealth of households with more than £100 million would raise around £10 billion every year while affecting fewer than 1,000 households,” said Tippet.
“Because the tax is so tightly targeted, the familiar criticisms of wealth taxes, administrative complexity, asset valuation, liquidity constraints and impacts on entrepreneurs, do not hold.”
How the tax would stop the wealthy from simply leaving
The design answers the most common objection to a wealth tax, that the richest households would relocate to avoid it.
Households above the £100 million threshold would remain liable for the tax for up to ten years after ceasing UK residence, a mechanism the authors modelled on the principle recently introduced for UK inheritance tax.
Tippet said rapid implementation would prevent relocation before the tax takes effect, and noted that HMRC has already started collecting the information on billionaire wealth needed to administer it.
The high threshold also keeps enforcement manageable. Because fewer than 1,000 households fall within scope, HMRC could concentrate compliance, valuation and enforcement resources on a very small number of taxpayers, with administrative costs estimated at less than 1% of revenues.
