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The idea of a wealth tax has raised its head – yet again – as the government attempts to balance its books.

Downing Street refused to rule out a wealth tax after former Labour leader Lord Kinnock told Sky News he thinks the government should introduce one.

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Lord Kinnock calls for ‘wealth tax’

Sir Keir Starmer’s spokesman said: “The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden.”

While there has never been a wealth tax in the UK, the notion was raised under Rishi Sunak after the COVID years – and rejected – and both Harold Wilson’s and James Callaghan’s Labour governments in the 1970s seriously considered implementing one.

Sky News looks at what a wealth tax is, how it could work in the UK, and which countries already have one.

Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer at the launch of the 10-year health plan in east London. Pic: PA
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Will Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer impose a wealth tax? Pic: PA

What is a wealth tax?

A wealth tax is aimed at reducing economic inequality to redistribute wealth and to raise revenue.

It is a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.

The tax typically includes the total market value of assets, including savings, investments, property and other forms of wealth – minus a person’s debts.

Unlike capital gains tax, which is paid when an asset is sold at a profit, a wealth tax is normally an annual charge based on the value of assets owned, even if they are not sold.

A one-off wealth tax, often used after major crises, could also be an option to raise a substantial amount of revenue in one go.

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Wealth tax would be a ‘mistake’

How could it work in the UK?

Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m.

Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people – fewer than 0.04% of the population – and raise £24bn a year.

Because of how few people would pay it, Tax Justice says that would make it easy for HMRC to collect the tax.

The group proposes people self-declare asset values, backed up by a compliance team at HMRC who could have a register of assets.

Which countries have or have had a wealth tax?

In 1990, 12 OECD (Organisation for Economic Co-operation and Development) countries had a net wealth tax, but just four have one now: Colombia, Norway, Spain and Switzerland.

France and Italy levy wealth taxes on selected assets.

Colombia

Since 2023, residents in the South American country are subject to tax on their worldwide wealth, but can exclude the value of their household up to 509m pesos (£92,500).

The tax is progressive, ranging from a 0.5% rate to 1.5% for the most wealthy until next year, then 1% for the wealthiest from 2027.

Bogota in Colombia, which has a wealth tax
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Bogota in Colombia, which has a wealth tax

Norway

There is a 0.525% municipal wealth tax for individuals with net wealth exceeding 1.7m kroner (about £125,000) or 3.52m kroner (£256,000) for spouses.

Norway also has a state wealth tax of 0.475% based on assets exceeding a net capital tax basis of 1.7m kroner (£125,000) or 3.52m kroner (£256,000) for spouses, and 0.575% for net wealth in excess of 20.7m kroner (£1.5m).

Norway has both a municipal and state wealth tax. Pic: Reuters
Image:
Norway has both a municipal and state wealth tax. Pic: Reuters

The maximum combined wealth tax rate is 1.1%.

The Norwegian Labour coalition government also increased dividend tax to 20% in 2023, and with the wealth tax, it prompted about 80 affluent business owners, with an estimated net worth of £40bn, to leave Norway.

Spain

Residents in Spain have to pay a progressive wealth tax on worldwide assets, with a €700,000 (£600,000) tax free allowance per person in most areas and homes up to €300,000 (£250,000) tax exempt.

Madrid in Spain. More than 12,000 multimillionaires have left the country since a wealth tax was increased in 2022. Pic: Reuters
Image:
Madrid in Spain. More than 12,000 multimillionaires have left the country since a wealth tax was increased in 2022. Pic: Reuters

The progressive rate goes from 0.2% for taxable income for assets of €167,129 (£144,000) up to 3.5% for taxable income of €10.6m (£9.146m) and above.

It has been reported that more than 12,000 multimillionaires have left Spain since the government introduced the higher levy at the end of 2022.

Switzerland

All of the country’s cantons (districts) have a net wealth tax based on a person’s taxable net worth – different to total net worth.

Zurich is Switzerland's wealthiest city, and has its own wealth tax, as do other Swiss cantons. Pic: Reuters
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Zurich is Switzerland’s wealthiest city, and has its own wealth tax, as do other Swiss cantons. Pic: Reuters

It takes into account the balance of an individual’s worldwide gross assets, including bank account balances, bonds, shares, life insurances, cars, boats, properties, paintings, jewellery – minus debts.

Switzerland also works on a progressive rate, ranging from 0.3% to 0.5%, with a relatively low starting point at which people are taxed on their wealth, such as 50,000 CHF (£46,200) in several cantons.

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Starmer and Macron agree need for ‘new deterrent’ to stop small boat crossings

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Starmer and Macron agree need for 'new deterrent' to stop small boat crossings

Sir Keir Starmer and Emmanuel Macron have agreed the need for a “new deterrent” to deter small boats crossings in the Channel, Downing Street has said.

The prime minister met Mr Macron this afternoon as part of the French president’s state visit to the UK, which began on Tuesday.

High up the agenda for the two leaders is the need to tackle small boat crossings in the Channel, which Mr Macron said yesterday was a “burden” for both the UK and France.

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The small boats crisis is a pressing issue for the prime minister, given that more than 20,000 migrants crossed the English Channel to the UK in the first six months of this year – a rise of almost 50% on the number crossing in 2024.

Sir Keir is hoping he can reach a deal for a one-in one-out return treaty with France, ahead of the UK-France summit on Thursday, which will involve ministerial teams from both nations.

The deal would see those crossing the Channel illegally sent back to France in exchange for Britain taking in any asylum seeker with a family connection in the UK.

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However, it is understood the deal is still in the balance, with some EU countries unhappy about France and the UK agreeing on a bilateral deal.

French newspaper Le Monde reports that up to 50 small boat migrants could be sent back to France each week, starting from August, as part of an agreement between Sir Keir and Mr Macron.

A statement from Downing Street said: “The prime minister met the French President Emmanuel Macron in Downing Street this afternoon.

“They reflected on the state visit of the president so far, agreeing that it had been an important representation of the deep ties between our two countries.

“Moving on to discuss joint working, they shared their desire to deepen our partnership further – from joint leadership in support of Ukraine to strengthening our defence collaboration and increasing bilateral trade and investment.”

It added: “The leaders agreed tackling the threat of irregular migration and small boat crossings is a shared priority that requires shared solutions.

“The prime minister spoke of his government’s toughening of the system in the past year to ensure rules are respected and enforced, including a massive surge in illegal working arrests to end the false promise of jobs that are used to sell spaces on boats.

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“The two leaders agreed on the need to go further and make progress on new and innovative solutions, including a new deterrent to break the business model of these gangs.”

Chris Philp, the shadow home secretary, seized on the statement to criticise Labour for scrapping the Conservatives’ Rwanda plan, which the Tories claim would have sent asylum seekers “entering the UK illegally” to Rwanda.

He said in an online post: “We had a deterrent ready to go, where every single illegal immigrant arriving over the Channel would be sent to Rwanda.

“But Starmer cancelled this before it had a chance to start.

“Now, a year later, he’s realised he made a massive mistake. That’s why numbers have surged and this year so far has been the worst in history for illegal channel crossings.

“Starmer is weak and incompetent and he’s lost control of our borders.”

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Ex-Tory chairman Sir Jake Berry defects to Reform

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Ex-Tory chairman Sir Jake Berry defects to Reform

Ex-Tory chairman Sir Jake Berry has defected to Reform, in the latest blow to the Conservatives.

The former MP for Rossendale and Darwen, who served as Northern Powerhouse minister under Boris Johnson and lost his seat last year, said he had defected to Nigel Farage’s party because the Tories had “lost their way”.

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Reform UK confirmed the defection to Sky News, which was first broken by The Sun.

Speaking to the paper, Sir Jake said Mr Farage’s party was the “last chance to pull Britain back from terminal decline”.

“Our streets are completely lawless,” he said.

“Migration is out of control. Taxes are going through the roof.

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“And day after day, I hear from people in my community and beyond who say the same thing: ‘This isn’t the Britain I grew up in’.”

Sir Jake accused his former party of “abandoning the British people” but said he was not “giving up”.

“I’m staying. And I’m fighting.

“Fighting for the Britain I want my kids, and one day, my grandkids, to grow up in.”

Mr Farage welcomed what he said was “a very brave decision” by Sir Jake.

“His admission that the Conservative government he was part of broke the country is unprecedented and principled,” he added.

A Conservative Party spokesman said: “Reform support increasing the benefits bill by removing the two-child cap, and nationalising British industry. By contrast the Conservatives, under new leadership, will keep making the case for sound money, lower taxes and bringing the welfare bill under control.

“We wish Jake well in his new high spend, high tax party.”

Sir Jake’s defection to Reform comes just days after former Conservative cabinet minister David Jones joined Reform UK, which continues to lead in the polls.

European Research Group (ERG) chair Mark Francois (left), and deputy chair David Jones, speak to the media outside Portcullis House, Westminster
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Former Welsh secretary David Jones (R) alongside Tory MP Mark Francois. Pic: PA

Mr Jones, who was MP for Clwyd West from 2005 until standing down in 2024, said he had quit the Tories after “more than 50 years of continuous membership”.

Sir Jake was the MP Rossendale and Darwen in Lancashire between 2010 and 2024, when he was defeated by Labour’s Andy MacNae.

He held several ministerial posts including in the Department for Housing, Communities and Local Government, Energy and Climate Change and the Cabinet Office.

Nigel Farage holds up six fingers to indicate the six votes his party's candidate won by in the Runcorn and Helsby by-election.
Pic: Reuters
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Nigel Farage after winning the Runcorn and Helsby by-election.
Pic: Reuters

He was also chairman of the Conservative Party from September to October 2022, under Liz Truss.

Announcing his defection – which comes a year after the Tories suffered their worst ever election defeat – Sir Jake said “Britain was broken” and “the Conservative governments I was part of share the blame”.

“We now have a tax system that punishes hard work and ambition,” he said.

“Just this week, we saw record numbers of our brightest and best people leaving Britain because they can’t see a future here. At the same time, our benefits system is pulling in the world’s poor with no plan for integration and no control over who comes in.

“If you were deliberately trying to wreck the country, you’d be hard-pressed to do a better job than the last two decades of Labour and Tory rule.

“Millions of people, just like me, want a country they can be proud of again. The only way we get that is with Reform in government. That’s why I’ve resigned from the Conservative Party. I’m now backing Reform UK and working to make them the next party of government.”

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He added: “And with Nigel Farage leading Reform, we’ve got someone the country can actually trust. He doesn’t change his views to fit the mood of the day. And people respect that. So do I. That’s why I believe he should be our next prime minister.”

A Labour Party spokesperson said: “Not content with taking advice from Liz Truss, Nigel Farage has now tempted her Tory Party chairman into his ranks.

“It’s clear Farage wants Liz Truss’s reckless economics, which crashed our economy and sent mortgages spiralling, to be Reform’s blueprint for Britain. It’s a recipe for disaster and working people would be left paying the price.”

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Controversial welfare bill passes final Commons stage – but only after another concession

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Controversial welfare bill passes final Commons stage - but only after another concession

Sir Keir Starmer’s watered down welfare bill has passed its final stage in the Commons, after another concession was made to MPs.

The Universal Credit and Personal Independence Payments Bill passed by 336 votes to 242 on Wednesday night – a majority of 94.

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In a bid to thwart further opposition to the bill following last week’s climbdown, the government said it would not try to introduce any more reforms to personal independence payments (PIP) until a review by work and pensions minister Sir Stephen Timms on the assessment process has concluded.

Sir Stephen said he wanted to finish his review by next autumn, but that the government would not agree to complete the review in 12 months as some MPs wanted.

Marie Tidball, the Labour MP who had called for the 12-month limit, later signalled she was happy with the government’s compromise.

Ministers also agreed to her calls to have a majority of the taskforce looking at PIP to be disabled or from disability organisations, and for the outcome of the review to come before any PIP changes. It will also be voted on by MPs.

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A total of 47 Labour MPs have rebelled against the government to vote against its welfare reforms.

Mother of the House Diane Abbott, former minister Dawn Butler, Andy McDonald, Stella Creasy and Jonathan Brash were among those in the “no” lobby.

Meanwhile, MPs rejected a separate amendment by Green MP Sian Berry, which called for the basic rate of universal credit to increase by 4.8% above inflation each year until 2030.

A total of 39 Labour MPs voted for scrapping the clauses that halved Universal Credit for new claimants – the only major cut left in the bill after the government made its concessions.

The passing of the bill will come as a relief to Sir Keir Starmer, who last week was forced into a humiliating climbdown over his flagship welfare package in the face of significant opposition from his own MPs.

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Prior to the vote last Tuesday, the government offered significant concessions including exempting existing personal independence payment claimants (PIP) from stricter new criteria and only freezing and cutting the universal credit health top-up for new applications.

As the vote last week unfolded, it offered further confessions amid concerns the bill could be voted down – notably, that changes in eligibility for PIP would not take place until a review he is carrying out into the benefit is published in autumn 2026.

They ended up voting for only one part of the plan: a cut to Universal Credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.

A total of 49 Labour MPs voted against the bill – the largest rebellion in a prime minister’s first year in office since 47 MPs voted against Tony Blair’s Lone Parent benefit in 1997, according to Professor Phil Cowley from Queen Mary University.

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