TUC Wealth Tax Explained: Rates, Scope, and Obstacles

The TUC’s wealth tax proposal is a plan from the Trades Union Congress to levy an annual tax on the roughly 0.3% of UK adults holding more than £3 million in net wealth outside their pensions, using three graduated rates to raise an estimated £10.4 billion a year for public services. No such tax exists in the UK today, and an independent commission that studied the idea concluded an annual wealth tax would be very difficult to run in practice, even as polling shows strong public support.

Who Would Pay

The proposal targets individuals whose net wealth, excluding pensions, sits above £3 million. At that threshold roughly 142,000 people would owe the tax, about 0.27% of UK adults. The figure lines up with official statistics showing the wealthiest 1% of households held at least £3.1 million in total wealth in 2020–2022.¹²

The higher bands narrow the pool sharply. About 48,000 adults (0.09%) hold non-pension wealth above £5 million, and roughly 17,000 (0.02%) hold more than £10 million. The TUC has framed these thresholds as deliberately high, so that ordinary homeowners, savers, and retirees would never come close to paying.¹

One point of confusion is worth flagging. The TUC’s 2024 Congress passed a broader motion calling for a wealth tax on the “richest one per cent” to raise £25 billion a year. That is a political aspiration, not a costed proposal, and it sits well above the £10.4 billion the TUC’s own detailed analysis actually projects.³

The Three Rates and How They Work

The rates are marginal. Each applies only to the slice of wealth that falls inside its band, not to the taxpayer’s entire fortune. The bands are:

Wealth between £3 million and £5 million is taxed at 1.7% a year, projected to raise £2.7 billion from around 142,000 people.
Wealth between £5 million and £10 million is taxed at 2.1% a year, projected to raise a further £3.2 billion from about 48,000 people.
Wealth above £10 million is taxed at 3.5% a year, projected to raise £4.6 billion from roughly 17,000 people.

Together the bands are estimated to produce £10.4 billion a year.¹

A worked example makes the marginal structure clearer. Someone with exactly £6 million in non-pension wealth would pay 1.7% on the £2 million between £3 million and £5 million (£34,000), plus 2.1% on the £1 million between £5 million and £6 million (£21,000). Total bill: £55,000. The 3.5% rate would not touch any of their wealth. The logic mirrors income tax bands and prevents a jump in liability the moment someone crosses a threshold.

What Counts as Wealth

The tax applies to total net wealth, minus pensions. That exclusion matters because pensions are the largest single component of household wealth for most Britons, and stripping them out means retirement savings that people cannot easily access before pension age are not touched.¹

For people above the £3 million threshold, the TUC breaks the composition down as follows:

Net financial wealth outside pensions (stocks, shares, savings): 53.3%
Primary residence: 23.6%
Other property, including second homes and buy-to-let: 18.7%
Physical wealth such as cars, jewellery, and artwork: 4.4%

Because the tax is on net wealth, mortgages and other debts reduce the taxable base. A £4 million property portfolio with £1.5 million of outstanding mortgage debt counts as £2.5 million.¹

Financial assets dominating the taxable base has practical implications. Publicly traded shares and savings balances are easy to value against market prices. Property valuations are trickier but have well-established methods through council tax and inheritance tax. The real difficulties emerge with private business equity, artwork, and other assets that rarely change hands and have no obvious price.

Where the Money Would Go

The TUC has set out priority spending areas for the projected revenue. These include cutting NHS waiting lists, with a target of over 90% of non-urgent patients treated within 18 weeks by 2029; increasing school budgets for basics such as textbooks and building repairs; funding local services such as libraries and leisure centres; and expanding community policing.⁴

The wider Congress motion goes further, calling for local authority funding to be restored to pre-austerity levels and a 10% pay rise for public sector workers. Those ambitions sit within the £25 billion Congress target rather than the £10.4 billion the detailed three-band proposal would actually raise.³

Why the Proposal Faces Serious Obstacles

The most detailed independent look at whether a UK wealth tax could work came in 2020 from the Wealth Tax Commission, hosted by the London School of Economics. Its central finding on annual wealth taxes was blunt: an annual wealth tax “is a non-starter,” and the government should instead fix existing taxes on wealth such as inheritance tax, capital gains tax, and property levies.⁵

Several problems drive that verdict. The first is liquidity. Someone can hold £8 million in net wealth and still find a five- or six-figure annual bill hard to pay if most of it is locked up in a family business and a home. Researchers describe these taxpayers as “asset rich, cash poor.”⁶ The TUC’s design mitigates this to a degree, since more than half the taxable base at these wealth levels is financial assets that can be sold or drawn down. Even so, roughly 42% of taxable wealth is tied up in property and physical assets, which could create genuine cash-flow difficulty for some taxpayers. The Commission suggested any workable tax would need to allow deferred payment, instalment plans, or settlement from pension lump sums at retirement.⁵

The second problem is avoidance and mobility. The people who would owe the tax are also the most able to relocate themselves or their assets. Researchers studying Swiss wealth taxes found a 1% rate immediately reduced reported wealth by 18%, mostly through reclassification and sheltering rather than actual loss. Across at least nine European countries that once ran annual wealth taxes (including Austria, Denmark, Germany, the Netherlands, Finland, Iceland, Luxembourg, Sweden, and France) the pattern was consistent: revenues came in below projections, administrative costs were high, and the taxes were eventually repealed. Germany’s version was struck down by its constitutional court for treating asset types unequally; Sweden’s became regressive because business-equity exemptions let the very richest pay less than the moderately rich.⁷

Norway is the most prominent country still operating an annual wealth tax. In 2026 Norwegian taxpayers face combined municipal and state rates of up to 1.1% on net wealth above NOK 1.9 million (around £140,000), with a top state rate of 0.75% on wealth above NOK 21.5 million.⁸ The TUC’s proposed top rate of 3.5% is more than three times Norway’s highest bracket.

The Commission’s own modelling also suggests the TUC’s revenue figures may be optimistic. To raise £10 billion a year from a £2 million threshold, the Commission calculated a required rate of just 0.57%. The TUC’s rates of 1.7% to 3.5% on higher thresholds imply either much larger yields than the Commission projected or significant erosion from avoidance behaviour once the tax is in place.⁵

Valuation is the third problem. Publicly listed shares have market prices; private companies, artwork, intellectual property, and minority stakes in unlisted businesses do not. Every disputed valuation adds administrative cost. The Commission estimated that simply building the infrastructure to run a new annual wealth tax would cost around £600 million upfront, roughly 10% of HMRC’s operating budget at the time.⁵

The TUC’s counterargument rests on the scale of the inequality it wants to address: the richest 1% of households hold as much total wealth as the bottom 50% combined. On that view, even a tax that raises less than projected would shift the balance of a system that currently taxes earned income more heavily than accumulated assets.²

The One-Off Alternative

While the Commission rejected an annual wealth tax, it did find that a one-off wealth tax could work as a crisis response. Its illustrative modelling suggested a one-off tax at a £500,000 threshold charged at 1% a year for five years could raise £260 billion, while a £2 million threshold could raise £80 billion. The critical difference is that a one-off tax, announced and assessed on a single date, gives taxpayers no realistic window to restructure holdings or relocate abroad to escape it. That is the mechanism most of the avoidance problems with annual wealth taxes hinge on.⁵ The TUC’s proposal is not a one-off; it is a recurring annual charge, which is the design the Commission found hardest to defend.

1
TUC. Modest Wealth Tax on Richest 0.3% Could Yield £10bn for the Public Purse
2
Office for National Statistics. Household Total Wealth in Great Britain: April 2020 to March 2022
3
TUC Congress. Motion 11 Fixing Our Broken Economy
4
TUC. Public Overwhelmingly Back Wealth Tax Package to Fix Public Services and Rebuild Britain
5
LSE. A Wealth Tax for the UK – Wealth Tax Commission Final Report
6
Wiley Online Library. Liquidity Issues: Solutions for the Asset Rich, Cash Poor
7
LSE Research Online. Why Were Most Wealth Taxes Abandoned and Is This Time Different
8
Skatteetaten. Net Wealth Tax and Valuation Discounts