How would a wealth tax work – and who'd pay it? Millionaires urge Sunak to tax them more

Ahead of this week’s autumn budget, a group of 30 millionaires has called on Chancellor Rishi Sunak to introduce a wealth tax for Britain’s richest citizens.

In one (n open letter released this week, the signatories appealed to Sunak to tax rich people like themselves more heavily, arguing that “the cost of recreation cannot fall on the young or those on lower incomes”.

Among those who put their name into words are Gary Stephenson, a former City retailer, and tech entrepreneur Gemma McGough.

READ MORE: What Will The Fall Budget Include – And What Will It Mean For Me?

The letter also pointed to the recent leak from the Pandora Papers, which exposed the tax avoidance practices of some of the richest and most influential people in the world.

What is the highest income tax rate in the UK?

The current maximum income tax rate is 45% on incomes over £ 150,000.

Income between £ 50,271 and £ 150,000 is taxed at 40% while the property tax rate of 20% is taxed on income between £ 12,571 and £ 50,270.

The personal allowance – below which income is not taxed – is £ 12,570.

How would a wealth tax work?

The Covid crisis and associated costs – including the vacation program and the added burden on the NHS – have boosted government borrowing.

Rishi Sunak has already announced an annual increase in Social Security of £ 12 billion to partially cover soaring welfare costs, but this has been widely criticized as it hits ordinary workers hardest.

This has led to renewed calls for a wealth tax so that the burden of recovery from the pandemic is borne by those with the broadest shoulders.

Such a tax would siphon off a small percentage of large fortunes, either as a one-off levy or as a permanent feature.

Its proponents argue that an unexpected tax on the richest would make both moral and financial sense, given the disproportionate impact of the pandemic on the poorest.

Who pays wealth tax?

This week’s open letter signatories do not propose any precise rates or thresholds at which wealth should be taxed, but do suggest that they “can do more”.

Wealth should be taxed to reduce inequality, support greater welfare and the NHS, and ensure we build a fairer and greener society ”.

Will there be a wealth tax?

A leaked treasury memo Last year it became known that officials had discussed a number of options, including possible income tax increases to help cover recovery costs.

However, there is still no evidence that Rishi Sunak is considering introducing a windfall tax for the UK’s richest citizens, although the move would likely find significant support.

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