Downing Street has declined to categorically rule out imposing a “wealth tax” on Britain’s richest people after former Labour leader Lord Neil Kinnock said such a levy was a good way to fill a growing hole in the public finances.
Chancellor Rachel Reeves is under mounting pressure to raise taxes after last week’s £5bn retreat on welfare savings despite having ruled out a wealth tax on several occasions, including in April this year.
Kinnock has called for a 2 per cent tax on assets over £10mn, claiming it would raise more than £10bn a year. Many Labour MPs have urged Reeves to increase taxes on the wealthy, whether through raising capital gains tax or imposing a possible “mansion tax” on expensive properties.
At a briefing with journalists on Monday, a spokesperson for Sir Keir Starmer said: “The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden.”
He also highlighted the fact Reeves had previously rejected a new wealth tax, but, asked whether he could rule out any such levy, he said: “I’m not going to write a future Budget for you now.”
Starmer’s spokesperson said Reeves had already raised duties on private jets and non-doms. She also raised capital gains tax rates in last year’s Budget and increased taxes on private schools.
Economists have estimated that the chancellor could face a fiscal hole of £20bn or more at her autumn Budget, the result of the government’s retreats on reforms to welfare and winter fuel payments and possible downgrades to growth forecasts.
Reeves has ruled out any relaxation of her borrowing rules and acknowledges that forcing painful spending cuts through parliament will be tough, leaving big tax rises as the most likely solution.
She said in 2023, before the general election, that she had “no plans for a wealth tax”, a position she restated in April 2025.
Asked then by the Telegraph if she could reject increases in wealth taxes in her autumn Budget, she said: “I can.” She added: “I’ve been really clear about this on a number of occasions.”
“We’re not interested in a wealth tax,” she said on that occasion. “Our priority is to grow the economy and that’s the way that you make working people better off and secure better public finances.”
Reeves has grown frustrated by Labour MPs who have voted down welfare savings while arguing the cost could be met by taxing the wealthy further.
The Treasury is already concerned by the departure of wealthy people after she tightened non-dom rules in last year’s Budget and is considering diluting the proposals to stop the exodus.
Lord Nick Macpherson, former permanent secretary of the Treasury and now chair of the private bank C Hoare & Co, said: “Wealth taxes are great in theory but never work in practice.”
He added: “Why would a government which has almost certainly lost revenue on its non-dom reforms open up a new front on footloose billionaires? It would lose revenue, and is no substitute for taxing income or consumption.”
John Glen, former Conservative City minister, said it was “utterly predictable” that Labour MPs and peers wanted to increase taxes on the wealthy.
“We need wealth creators to feel part of the growth solution not the whipping boys of Labour’s economic illiteracy,” he said. “The lack of a serious plan on welfare and reductions in growth forecasts mean an inevitable next wave of wealth taxes will be considered.”
