Reeves under pressure to create wealth tax

Newsletter issue – July 2025

The financial pressures facing Chancellor Rachel Reeves continue to mount, particularly regarding a projected £57 billion shortfall in the country’s finances.

Public sentiment is shifting towards tax increases on wealthier individuals, with 48% in a recent poll (by BMG Research) supporting higher income taxes on those earning over £125,000. 29% backed a rise in capital gains tax whilst 26% supported an increase in corporation tax.

Alternative tax proposals include a 2% annual levy on assets over £10 million, which it is claimed could generate £24 billion annually. Wealth taxation is emerging as a potentially more palatable option, focusing on net wealth, including property and investments.

The National Institute of Economic and Social Research warns that Reeves must either cut public spending or raise taxes to meet Labour's fiscal rules by 2029. The political rise of Reform UK adds further pressure, as broad tax hikes face opposition, especially inheritance tax.