How should a country respond when its wealthiest residents pay lower effective tax rates than many ordinary workers?
A new report from King’s College London economist Ben Tippet and renowned inequality scholar Gabriel Zucman argues that Britain has reached precisely that point. Their proposal is strikingly simple: households with more than £100 million in wealth should face a minimum annual tax equivalent to 2% of their total wealth.
The idea arrives at a moment when questions about wealth, inequality and public finances are becoming harder to ignore. According to the research, the wealth of the richest 300 UK households has risen from around 5% of GDP in 1989 to more than 16% today. If recent trends continue, that figure could reach 22% within a decade.
The authors argue that Britain’s existing tax system struggles to capture the growth of extreme wealth. While income from work is taxed when earned, large fortunes can continue to grow through increases in asset values, corporate ownership and investment gains that may never trigger a significant tax bill.
Their solution is a minimum tax designed specifically for the ultra-rich.
Under the proposal, households worth more than £100 million would pay a minimum effective tax rate of 2% of their wealth each year. Existing personal taxes already paid would count towards that total. If a household was already paying the equivalent of 2% of its wealth through income and other personal taxes, it would owe nothing extra. If not, it would pay the difference.
The report estimates that around 946 households would be affected.
Despite that small number, the projected revenues are substantial.
The researchers estimate the tax would raise around £10.4 billion in 2026 after allowing for avoidance, administrative costs and behavioural responses. That is equivalent to approximately 0.3% of GDP and nearly a third of the UK’s projected current budget deficit.
By 2036, annual revenues could rise to around £17.6 billion if recent trends in wealth growth continue.
One reason the proposal is likely to attract attention is that it deliberately avoids many of the problems traditionally associated with wealth taxes.
Historically, wealth taxes in Europe often failed because they covered large sections of the population, contained numerous exemptions and created opportunities for avoidance. Tippet and Zucman argue that a tax aimed solely at households with more than £100 million in wealth is fundamentally different.
Fewer than 1,000 households would fall within scope, allowing HMRC to concentrate valuation, auditing and enforcement resources on a small and identifiable group.
The report also proposes a ten-year post-emigration rule. Individuals who accumulated wealth while resident in Britain would remain liable for the tax for up to a decade after leaving the country. The authors point out that a similar principle already exists within recent inheritance tax reforms.
The most politically powerful finding may be the challenge the report poses to common assumptions about who benefits from Britain’s tax system.
Nearly half of the projected revenues would come from fortunes built primarily in finance, real estate and land. The report therefore frames the proposal not as a broad assault on entrepreneurs or business owners, but as an attempt to ensure those with extraordinary wealth contribute at rates more comparable to the rest of society.
Critics will undoubtedly raise concerns about capital flight, investment, valuation and competitiveness. The authors devote a significant section of the report to addressing those issues, arguing that many objections are rooted in experiences of earlier wealth taxes that operated very differently from what is being proposed here.
Whether politicians embrace the idea is another matter.
Britain has a long history of debating wealth taxation without implementing a comprehensive annual wealth tax. Yet growing pressure on public finances, combined with persistent concerns about inequality, means the conversation is unlikely to disappear.
The significance of this report is not simply the £10 billion headline figure. It is that the authors attempt to reframe the debate. Rather than asking whether wealth should be taxed, they ask whether a tax system can remain credible when some of the country’s richest households appear to face lower effective tax rates than many people who earn a salary.
That is a question likely to resonate far beyond economics departments.
Tippet, B. and Zucman, G. (2026). Taxing Extreme Wealth in the United Kingdom: Revenue Estimates for a 2% Minimum Tax on Ultra-High-Net-Worth Households. https://taxobservatory.world/publication/taxing-extreme-wealth-in-the-united-kingdom-revenue-estimates-for-a-2-minimum-tax-on-ultra-high-net-worth-households/
Dr Ben Tippet is Lecturer in Economics and Wealth Inequality at King’s College London. His research examines wealth concentration, taxation, inequality and climate change. He leads a British Academy/Leverhulme-funded project analysing Britain’s wealthiest families using data from The Sunday Times Rich List.