Autumn Budget 2026: Could Labour Turn to a Wealth Tax?

As the Government prepares for the Autumn Budget later in 2026, speculation continues over how the Chancellor might balance growing spending pressures with Labour's commitment to fiscal responsibility.  There is also an assumption that the Chancellor will want to honour the Labour Party’s manifesto pledge not to raise National Insurance, income tax rates or VAT and to cap corporation tax at 25% for this parliament.

Whilst there has been no formal indication that a UK wealth tax is imminent, debate has intensified among politicians, economists and campaign groups over whether the taxation of wealth should play a greater role in the UK's long-term tax strategy.

Discussion of a potential wealth tax has become more prominent following an open letter signed by 120 British millionaires, including Gary Lineker, calling on the Government to introduce a 2% annual tax on wealth exceeding £10million. Campaigners have suggested that such a measure could raise approximately £24billion per annum. By comparison, HMRC collected a record £8.2billion of inheritance tax receipts in 2024/25, highlighting the potentially significant revenue-raising capacity of even a narrowly targeted wealth tax.

There is, of course, considerable concern that raising wealth taxes could have the result of encouraging the wealth generators e.g. business owners and entrepreneurs, to leave the UK having an adverse impact on the economy generally as well as potentially leading to a net loss of tax revenue.

However, proposals aimed at increasing the taxation of wealth, particularly amongst the UK's wealthiest individuals, continue to attract strong public support. If the Government concludes that additional revenue-raising measures are necessary, a range of options aimed at wealthy individuals may be available for consideration.

1. An annual net wealth tax

One of the most frequently discussed options is the introduction of an annual tax on an individual's net wealth, calculated by reference to the value of their assets less liabilities.

Most proposals put forward have focused on applying such a tax only to the wealthiest individuals, with suggested thresholds typically ranging from £5million to £10million of net assets. Rates of between 1% and 2% have commonly been proposed on wealth exceeding those thresholds.

Supporters argue that a targeted wealth tax could generate substantial tax revenues from a relatively small segment of the population while helping to address concerns around wealth inequality. Critics however, point to the significant practical challenges, including the valuation of private companies, farms, artworks and other illiquid assets.

These concerns were reflected in the conclusions of the Wealth Tax Commission in 2020, which noted that the administrative burden of a recurring wealth tax could be considerable and may influence taxpayer behaviour in ways that reduce its overall effectiveness.

2. A one-off wealth tax

An alternative approach would be the introduction of a one-off levy on accumulated wealth rather than a permanent annual charge. Such a measure is often presented as a way of raising substantial revenues from the wealthiest individuals in response to exceptional fiscal pressures, without fundamentally altering the UK's long-term tax framework.

The Wealth Tax Commission previously examined a model based on a 5% charge on wealth exceeding £500,000, payable over five years through annual instalments of 1%. It estimated that this approach could generate approximately £260billion during the collection period.

A one-off levy may be more politically acceptable than a recurring annual wealth tax and less damaging to the UK's attractiveness as a place to live, invest and do business. Nevertheless, significant practical challenges would remain, particularly around the valuation of assets and the liquidity available to meet the liability, as well as questions arising as to whether a supposedly exceptional measure would be viewed as a genuine one-off event or a precursor to future wealth taxes.

3. Capital gains tax (CGT) alignment with income tax rates

A more likely route may be to increase the taxation of capital gains, rather than introducing a new wealth tax altogether.

A longstanding feature of the UK tax system is that capital gains are generally taxed at lower rates than employment, rental and investment income. One option would therefore be to align CGT rates more closely with income tax rates, reducing the distinction between returns generated through capital appreciation and those arising from sources of income.

Policymakers may also look beyond headline rate increases and consider structural reforms to the CGT system. Potential measures could include the abolition of the CGT free uplift on death, which currently allows inherited assets to be rebased to market value, effectively eliminating any latent gains arising during the deceased's ownership. The Government could also consider an exit tax for individuals leaving the UK, triggering a deemed disposal of certain assets and bringing accrued gains into charge before a taxpayer ceases UK residence.

Such reforms would not represent a direct wealth tax but could form part of a wider strategy aimed at increasing the taxation of capital and accumulated wealth.

However, raising the rate of CGT without increasing reliefs for entrepreneurs (business asset disposal relief having been considerably watered down since its introduction) runs a real risk of more business owners leaving the UK to avoid tax on an exit event as was commonplace in times when CGT rates were considerably higher.

This is not merely a theoretical concern. In September 2026, Chris Rokos, the hedge fund manager and reportedly Britain's third-largest individual taxpayer, confirmed he was relocating his tax residence to Greece ahead of the Autumn Budget, having paid an estimated £330 million in tax during 2025. In parliament, the shadow chancellor cited Treasury figures suggesting the loss of Rokos's contribution alone would need to be made up by around 38,000 average income taxpayers. Whatever view is taken of that particular exchange, Mr Rokos is one of many ultra-high net worth individuals, including Lakshmi Mittal and Nassef Sawiris, to have left the UK following the end of the non-dom regime, and cases of this kind illustrate how sensitive such individuals can be to changes, whether confirmed or merely anticipated, in the UK tax regime.

4. Pension taxation

Whilst discussions around wealth taxation often focus on capital gains and inheritance tax, pensions represent one of the largest stores of private wealth in the UK and have increasingly become part of the wider debate.

Recent years have already seen significant changes to the tax treatment of pension wealth, and further reform cannot be ruled out. Speculation has periodically arisen around pension tax relief and the future of the 25% tax-free lump sum, both of which would have the potential to generate additional revenue.

More significantly, from April 2027, most unused pension funds and certain death benefits will be brought within the scope of inheritance tax. This will bring assets that have historically sat outside inheritance tax into charge on death and may have a significant impact on estate and succession planning for many individuals.

The Government's own forecasts suggest that the measure could generate £640 million in additional revenue during 2027/28, rising to £1.34 billion in 2028/29 and £1.46 billion in 2029/30. Treasury projections suggest the reforms will bring around 10,500 additional estates into the inheritance tax net each year, whilst increasing liabilities for a further 38,500 estates.

Although these changes do not amount to a wealth tax, they illustrate how the Government can increase the taxation of accumulated wealth through existing tax regimes without introducing a standalone annual wealth tax.

4. Inheritance tax reform

Inheritance Tax (IHT) remains one of the UK's most politically sensitive taxes and is frequently cited as a candidate for further reform.

Rather than introducing a separate wealth tax, the Government could seek to increase revenues by making further changes to the existing IHT regime, whether through the restriction of reliefs, the reduction of exemptions or broader reforms to the taxation of inherited wealth. To some extent, this process has already begun, with the April 2026 changes to Business Property and Agricultural Property Relief introducing limits on the availability of full relief for larger estates.

A more radical reform could involve moving away from the current estate-based system towards a lifetime receipts tax, where beneficiaries are taxed according to the amount they receive over their lifetime. Such a system could arguably target wealth transfers more directly while preserving incentives for saving and investment. Nevertheless, the complexity of such a reform, coupled with the transitional issues it would create, means that a fundamental shift to a lifetime receipts tax appears considerably less likely in the short term than more targeted changes to the existing IHT regime.

5. Property wealth tax or land value tax

Property remains one of the largest sources of wealth in the UK, making it a natural focus for policymakers exploring options to raise additional revenue.

The current council tax regime has faced criticism for many years, with some commentators arguing that property valuations based on historic bands no longer provide a fair reflection of relative housing wealth. Andy Burnham has previously described the system as "highly regressive" and has expressed support for exploring alternatives, including a proportional property tax and, more fundamentally, a land value tax, which would impose an annual charge based on the value of the underlying land rather than the property itself.

However, despite advocating longer-term reform, Burnham has ruled out replacing council tax and stamp duty land tax in this Autumn Budget. As a result, whilst reforms to property taxation may remain part of the broader policy debate, any significant changes in this area appear more likely to be a longer-term consideration rather than an immediate Budget measure.

Wealth tax or wealth taxation?

Although media attention frequently focuses on a headline "wealth tax", history suggests UK governments have generally preferred to amend existing taxes rather than introduce entirely new ones. The practical challenges of valuing wealth, combined with concerns over competitiveness and capital mobility, make an annual wealth tax difficult to implement.

International experience points in a similar direction. Over recent decades, many countries have either abolished or scaled back annual net wealth taxes, citing administrative complexity, valuation difficulties and concerns that the revenues generated did not justify the associated costs. As a result, only a small number of OECD countries continue to operate broad-based annual wealth tax regimes.

Against this backdrop, any measures announced in the Autumn Budget 2026 are more likely to focus on increasing the taxation of wealth through existing regimes, such as CGT, IHT and property taxation, rather than through the introduction of a wholly new wealth tax.

Nevertheless, with public finances under pressure and wealth inequality remaining a prominent political issue, the prospect of greater taxation of wealth is likely to remain firmly on the policy agenda throughout the remainder of this Parliament.

 

Meet the authors: Jordan Jackson, Senior Tax Manager, and Victoria Taylor, Partner.

The contents of this article are intended for general information purposes only and should not be regarded as tax, legal or financial advice. The proposals discussed are based on current public debate and commentary surrounding the Autumn Budget 2026 and do not represent announced Government policy.