Labour’s Smith proposes plan for wealth tax

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Labour leader hopeful Owen Smith has come in for criticism over plans to further tax the UK’s richest 1 per cent.

The Financial Times reports Smith wants to impose a 15 per cent tax on income from dividends, rents and investments for those earning more than £150,000 a year from their additional income.

The tax would affect 265,000 people and is expected to raise £2.8bn.

Several European countries such as France, Netherlands and Norway have a policy of targeting the rich, although countries such as Germany, Sweden and Luxembourg have shifted away from imposing wealth taxes.

Chartered accountancy Menzies private client tax director Craig Hughes told the FT the plan could encourage the UK’s wealthiest to leave the country.

He says: “These are very internationally mobile people with houses all over the world. If you say to these people, ‘like it or lump it’, they could easily say ‘lump it’ and disappear off.”

Hargreaves Lansdown senior analyst Laith Khalaf says such a tax would come on top of the dividend tax introduced in April on income above £5,000.

He says: “People above that [level] do pay dividend tax already, and an additional 15 per cent again would not be welcome.”