Fiscal drag taxes 920,000 workers
Nearly a million workers were dragged into higher tax bands this year while ministers still refuse to touch untaxed wealth over £10m.
A worker on £47,000 is paying £1,292 more in tax this year. Their pay did not rise in real terms. The government simply froze the thresholds and let inflation do the rest. Around 920,000 people were dragged into the higher rate band the same way, and 780,000 more who paid no income tax at all now do.
That is the real wealth tax in Britain today: a stealth levy on the middle class, applied automatically, with no vote and no minister’s name attached to it. Meanwhile a 2% tax on fortunes over £10m, the kind economists say could raise £15bn to £24bn a year, is treated by the same government as reckless fantasy.
The freeze that does the government’s dirty work
Rachel Reeves has confirmed that personal tax thresholds stay frozen in cash terms until April 2031, extending a freeze the Conservatives began. The Office for Budget Responsibility puts the revenue from this single mechanism at over £55bn by 2030/31. It is the biggest single earner in her budget, bigger than any tax rise she has had to defend at the despatch box, because nobody has to defend a number that was never announced.
The same budget cut £4.8bn from social security, mostly from Personal Independence Payment. By the government’s own impact assessment, that pushes 250,000 people into poverty, including 50,000 children. From November, a tightened PIP test is expected to strip the daily living payment from 440,000 people, seven in ten of them already in the poorer half of the country.
Reeves has told reporters she believes the budget has “drawn a line under tax hikes.” For the millionaire and the billionaire, that is true. For everyone else, the drag continues on autopilot until 2031.
The wealth tax the middle class actually needs
The argument resurfaced this week when Novara Media published Aaron Bastani’s interview with the economist and former City trader Gary Stevenson, released on 12 July alongside his Channel 4 documentary *How to Get Filthy Rich*. Stevenson, who grew up in Ilford and has spent the past two years campaigning on wealth inequality, put it plainly: “We are in a situation of high and rapidly growing inequality. And it is accelerating.” He frames his own proposal, a 2% annual tax on assets above £10m with no exemptions, not as confiscation but as a brake on a redistribution already under way, upward.
The numbers back the diagnosis. The richest 10% of households now hold 43% of all wealth in Britain; the bottom half hold under 9%. The IFS Deaton Review found that in 2008 it took ten years of typical full-time earnings to climb from the middle to the top of the wealth ladder. By 2018 it took almost sixteen. Property and pensions make up three-quarters of household wealth, the same assets a shrinking pool of buyers is pricing further out of reach every year.
This is not a fringe position. YouGov polling for Oxfam found 78% of the public support a 2% wealth tax on assets over £10m. Survation’s polling for Patriotic Millionaires UK found three in four UK millionaires say they are willing to pay more tax, and 64% want higher taxes on the wealthiest specifically so taxes can come down for everyone else.
Answering the “they’ll leave” argument
The strongest case against a wealth tax is not the one usually shouted loudest. Tax barrister Dan Neidle has called Stevenson’s numbers “essentially a rounding error” against £1.2 trillion of public spending, and he has a point worth taking seriously: valuing illiquid assets like private businesses, farmland and pension pots every year is genuinely hard, and building the machinery to do it could take years. A wealth tax alone will not close a hole of £26bn or more. It has to sit alongside equalising capital gains tax with income tax, worth another £11.3bn a year, and an end to balancing the books on fiscal drag.
It is also true that the top 1% already pay 27% of all income tax, up from 21% in 1999. The right treats this as proof the rich are already paying their share. It proves nothing of the sort. Income tax concentration reflects income concentration; it says nothing about the 43% of wealth sitting untaxed at the top, in assets rather than payslips.
What does not survive scrutiny is the exodus story wheeled out every time this debate starts. The claim that 10,800 millionaires fled Britain in 2024 comes from Henley & Partners, a firm that sells golden-passport and residency schemes for a living, and which tracked its figure by scraping where people claimed to work on social media. The Tax Justice Network went back to the actual data and found the real figure was closer to 9,500, out of 3.06 million UK millionaires, a rate barely different from the 0.2% who have left every year for a decade. Nearly 100% of Britain’s millionaires never went anywhere. A passport salesman’s guesswork became a front-page fact, repeated by outlets that never asked who was selling it.
Whose sacrifice is treated as normal
Every year the freeze holds, another wave of workers crosses into a higher band without a payslip that reflects it. Every year the wealth tax stays off the table, another £15bn to £24bn goes uncollected from fortunes that grew regardless. The government did not ask the £47,000 earner’s permission before taking £1,292 more from them. It has not yet found the courage to ask the £10m fortune for its 2%.
