It is safe to say that the current tax regime in this country is far from straightforward. We have Income Tax, to raise funds from employment earnings and savings income, Capital Gains Tax, to tax the increase in value of certain assets and Inheritance Tax, for transfers of wealth after death. And this is without the other numerous taxes involved in our lives.
But is there ever going to be a change to these long-held regimes? A recent report from the Wealth Tax Commission, an independent body established in the spring to analyse the possibilities, has just been published and suggests that there could be.
The proposal would be to scrap many of the existing tax regimes and replace them with one: the UK Wealth Tax.
The study explained that one option for the future would be to levy a wealth tax at a certain percentage, perhaps 1%, of the amount of assets someone owns above a particular threshold. For example, a wealth tax could be levied at 1% on any assets held above £500,000 – and it could either be one-off, or even annual.
According to the survey, the advantages of this route include comparative simplicity and also – rather surprisingly for a tax! – popular support. A survey in July found that the most preferred option was to choose a threshold of £500,000 for the start of the tax, rather than £250,000 or even £2 million and that 41% would prefer this route to increasing other taxes. The tax would also apparently be a good one for government revenue, with an estimated £260 billion raised if a wealth tax at these levels were charged for five years.
But will any of this move from discussion to law? The jury is out. Any change to the regime would of course take many years to put into practice, so we’ll have to wait and see!
For any support with taxes or later life planning. please talk to our dedicated Later Life Planning team, who will be happy to provide advice and support.