The idea of introducing a wealth tax to address Britain’s widening public finance deficit has been firmly rejected by UK Business Secretary Jonathan Reynolds, marking the first senior minister to openly rule out the controversial proposal.
Speaking to GB News on Friday, Reynolds criticized calls from senior Labour figures for a new tax targeting the assets of the wealthy as “populist” and “daft.” “There’s no kind of magic [tax]. We’re not going to do anything daft like that,” he said, urging politicians to “be serious about this.” He highlighted the practical challenges, questioning how such a tax would be applied to non-liquid assets like fine wine or art.
Reynolds’ comments come amid jitters within business and City circles over Labour’s growing interest in wealth taxation as a means to raise revenue. Chancellor Rachel Reeves has so far declined to rule out the possibility, telling the Commons Treasury committee earlier this week that she would not comment on tax measures ahead of the autumn Budget. Downing Street has also refrained from dismissing the idea outright, stating it avoids speculation on potential taxes before official announcements.
The Financial Times has reported that the idea of a wealth tax, once supported by former Labour leader Lord Neil Kinnock who proposed a 2 percent levy on assets above £10 million, remains divisive within the party. Kinnock estimated such a tax could generate over £10 billion annually.
Despite this, Reynolds sought to reassure the wealthy that no new tax targeting their assets was imminent, noting that the current Labour government has already increased taxes on wealth in other forms, including levies on private jets, private education, inheritance, and capital gains.
Economists have warned that implementing a new wealth tax would require several years to build an accurate asset database. Both Reeves and Reynolds are reportedly cautious about policies that could prompt high-net-worth individuals to relocate abroad.
Still, some senior Labour figures suggest Reeves might keep the option open by pursuing alternative measures—such as a “mansion tax” based on revaluing high-end properties or increasing existing taxes on capital gains and dividends—to help plug a fiscal gap estimated to exceed £20 billion.
