The Spear’s tax survey 2021 quizzed advisers on their views towards a range of taxes, including a proposed wealth tax
A post-pandemic wealth tax is ‘desirable’, given the current state of the UK’s public finances, according to nearly half of the tax advisers surveyed by Spear’s.
Some 48 per cent of the accountants, tax lawyers and other tax advisers to HNWs surveyed by Spear’s said that – leaving aside its practicality – a one-off tithe of the kind proposed by the Wealth Tax Commission would be ‘desirable’. Just 44 per cent said the opposite, while 8 per cent answered ‘don’t know’.
The Wealth Tax Commission – a group of experts and economists convened by the University of Warwick and London School of Economics – has mooted a 1 per cent levy on the value of assets above a threshold of £1m per household, which it claims could raise £260bn over five years.
Asked if they thought a one-off wealth tax was ‘practical’, a similar proportion of advisers (48 per cent) answered in the affirmative.
Two fifths (40 per cent) of the advisers surveyed believed that a wealth tax would not be practical. Of these, 20 per cent cited the fact that it may be ‘legally dubious’ as the primary reason for this. A further 20 per cent said it would be difficult to calculate.
‘The key factor would be how to decide which assets to assess,’ said one adviser who wished to remain anonymous. ‘Would you include the family home or a business, for example? ‘If the assets are not liquid how would it be paid? Could it be collected on death? It would prove very difficult to assess and record for families in that position.’
Given a choice of reasons for why a wealth tax would not be desirable, some 34 per cent said that other taxes ‘should be increased or reformed first’. Some 18.2 per cent of respondents said it would ‘damage the economy in the long run’ and 9 per cent said it would be ‘unjust or unfair’.
Some 34 per cent also answered ‘other’, with several citing a lack of workability and enforcement. ‘There would be loopholes everywhere,’ noted one adviser, while another simply said ‘the very wealthy would avoid it’.
What taxes to change?
With the government announcing a rise in National Insurance contributions, and continuing to moot the possibility of further tax rises, Spear’s asked advisers how they would alter UK taxes if they were in charge of the UK exchequer. A majority (57 per cent) said they would raise capital gains tax. Some 34 per cent said they would raise the top rate of income tax. And 23 per cent said they would hike VAT.
The least popular tax among advisers to HNWs is stamp duty; more than two fifths (42 per cent) said they would decrease it. Inheritance tax and VAT would be lowered by 26.9 per cent and 15.4 per cent of advisers, respectively. A majority of respondents would keep the current rates of corporation tax (61 per cent), inheritance tax (53 per cent) and VAT (57 per cent) unchanged.
‘The inheritance tax system is outdated and needs an overhaul which should increase the tax take but not necessarily the rate at which it is paid,’ said one adviser. ‘Increasing the top rate of income tax will help with very little impact for those that pay it.’
Biden’s corporation tax burden
In June, President Joe Biden’s policy for a minimum corporation tax of 15 per cent was endorsed by G7 countries, a rate that countries around the world are being encouraged to adopt.
Some 32 per cent of advisers surveyed by Spear’s said that more than half the countries in the world would sign up to the pledge, 25 per cent said ‘about half’, and 11 per cent said ‘very few’.
One adviser said that if low tax jurisdictions like Ireland accepted it, ‘everyone will’. ‘I can’t see a long term argument against it,’ they added.
Spear’s surveyed 37 top HNW tax advisers and lawyers for the survey.