UK Wealth Tax Could Provoke £100 Billion Outflow, Rathbones Warns

Tom Burroughes

20 October 2025

As the clock ticks down towards the 26 November Budget in the UK, wealth management firm says that more than £100 billion ($134.3 billion) of money could flood out of the country if the government brings in a wealth tax.

With a fiscal shortfall estimated between £20 and £50 billion, the government could explore property-based taxation as a more viable alternative to a wealth tax, the firm said.

Speculation continues as to what Chancellor of the Exchequer Rachel Reeves will do on the tax side to plug a much-discussed “black hole” in public finances. There have been calls at times for a wealth tax in the UK. Several European countries have introduced them over the years, with most later repealing them, as in the cases of Sweden and France. Even so, other countries persist with them. Norway has such a tax, and recenlty hiked it; Switzerland’s cantons operate them, with considerable variation.

One criticism of wealth taxes is that they are costly to implement because revenue officials must examine what potential payers’ wealth is worth – not always easy when illiquid assets such as property and private companies are involved. In its analysis, Rathbones said a wealth tax could cost the UK public sector £600 million to enforce, with ongoing compliance and administrative costs on taxpayers of £700 million or more.

“There is clear evidence that a recurring wealth tax would be economically damaging to the UK,” Oliver Jones, head of asset allocation at Rathbones Group and lead author of the analysis, said in a statement late last week.

"Such a tax would require annual valuations of complex and illiquid assets – including private businesses, art, and intellectual property – for thousands of individuals. This process would be costly to administer, difficult to enforce, and could create significant economic distortions,” Jones said.

The firm bases its prediction of how much wealth could flow out of the country based on UK official data and its study of wealth taxes that have been imposed.

The data adds to concerns that the UK government’s ending of the residential non-domicile system is narrowing, not expanding, its tax base, and damaging economic growth. With jurisdictions such as Italy offering residency systems aimed at HNW individuals, there has already been an exodus. This news service recently interviewed a non-dom about her decision to leave the UK for Italy. (See more on such topics here.)

“Changes to the non-dom regime have already slowed the influx of the super-rich – and a wealth tax risk accelerating an exodus of wealthy individuals from the UK. We have highly-paid professional clients now looking to relocate to more tax-efficient jurisdictions like Dubai or Singapore. Many others may simply decide not to come here in the first place,” Simon Bashorun, head of advice at Rathbones Private Office, said.

“In a world where countries are constantly competing to attract wealthy individuals and their tax dollars to bolster economic growth – something the UK is crying out for – we seem to be making it harder for ourselves to win,” Bashorun added.

Foreign examples
Analysing wealth taxes in the three high-income countries where they are currently implemented (Spain, Norway, and Switzerland) economists at Rathbones conclude that international experience offers little encouragement.

Rathbones said that since the 1990s, the number of rich countries levying wealth taxes has fallen by three-quarters, from twelve to just three. Spain and Norway raise comparatively little revenue through their limited wealth taxes, far less than UK advocates anticipate, the UK firm said. Only Switzerland raises significant revenue from wealth taxation, but its entire tax system is structured differently, with minimal taxes on income, dividends, and inheritance, it said.

France announced in 2017 that it would replace its wealth tax with a property tax. Rathbones said the number of eligible taxpayers leaving France had fallen to its lowest annual rate since 2005. And the number of wealthy taxpayers returning to France increased, rising to nearly 250 in 2018 from around 100 before the reform.