Merryn Talks Money Here’s the UK Wealth Tax to Really Worry About
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Jul 9, 2025 The discussion dives into the UK's daunting debt problem and its implications for future financial stability. Merryn and John examine wealth taxes, focusing on inheritance tax and capital gains tax as potential targets. They highlight the political challenges that often impede effective taxation reforms. The conversation also touches on the governance issues stifling economic growth and the urgent need for tax system reassessment. Finally, they explore the evolving roles of cryptocurrency and gold in personal investment strategies amidst the UK's financial landscape.
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UK's Unsustainable Debt Crisis
- The UK's debt is at a 75-year high with unsustainable borrowing costs.
- Political reluctance to cut spending or reform welfare worsens the fiscal outlook.
Wealth Tax Unlikely but Taxes Will Rise
- Wealth tax in the UK is politically toxic and historically unsuccessful.
- Expect increased capital gains and inheritance taxes instead of a direct wealth tax.
Why the UK Debt Crisis Means a New Kind of Wealth Tax Is Coming
The UK is facing a daunting debt crisis with borrowing costs among the highest of advanced economies, making its public finances unsustainable.
Merryn Somerset Webb explains that the government has been unable to cut spending or welfare effectively, resulting in a persistent growth in debt despite promises to reduce deficits.
A traditional wealth tax is unlikely to be introduced effectively, but increases in existing wealth-related taxes such as inheritance tax (IHT) and capital gains tax (CGT) are expected.
Key proposals include:
- Removing the residential nil-rate band on IHT, which currently allows passing on an additional amount tied to the family home tax-free.
- Ending the rebasing of assets for CGT on death, meaning estates could be liable for both CGT and IHT, leading to potentially very high combined tax rates.
These changes amount to a new form of stealth wealth tax, likely to provoke public backlash but aimed at raising more revenue to address the fiscal challenges.