Thursday, 1 April 2010

Wealth Tax

According to the World Wealth Report 2009, the UK has 362,000 High Net Worth Individuals (HNWIs). An HNWI is defined as a person worth more than $1million, excluding their primary residence and chattels. Their average wealth is approximately $3.6million, which means that they control $1.3trillion of wealth.

If we convert these figures into Sterling, which on today's rates makes a dollar worth about 60p, the average wealth of a UK HNWI is £2.16million, which means they control £782billion of wealth. And in the Sterling-denominated world, a HNWI is a person worth more than £600,000, excluding their primary residence & chattels.

A few more figures to regurgitate here - the total population of the UK is 61million, and the total personal wealth in the UK is £9trillion, according to the ONS. We're talking about less than 1% of the total population of the UK, who are in control of at least 8.7% of its total wealth.

What if these people were taxed on that wealth?

If a Wealth Tax were to be introduced, with a threshold of, say, £600,000, these 362,000 people would be subject to that tax. So if you give them an allowance of £600,000, that means that, on average, each of them has £1.56million which is assessable for tax.

It should be a small tax. After all, we don't want to drive them away from the UK. 1% should be quite sufficient. On average, they'd only pay an additional £15,600 of tax per year, which is hardly going to break the bank for them.

This would raise £5.6billion per year. The rises in National Insurance which come into effect next year will raise £3billion per year. Which do you think is fairer?

Just a thought...

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