Martin Lewis provides pension advice for the self-employed

The one-off wealth levy was proposed by economic think tank the Wealth Tax Commission as a way to pay for coronavirus. It would be one of the biggest tax grabs of all time, paid by almost 10 million people. All British residents with personal wealth of more than £500,000 would pay a onetime one per cent tax spread over five years, under the proposals.

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More than 500,000 people could have to sell their homes to afford the tax bill, unless a system for deferring payments was put in place, the group of academics and think tanks admitted.

Critics immediately slammed the idea, saying it would hammer asset-rich, cash-poor families who would struggle to afford the tax. Rachael Griffin, tax expert at investment specialists Quilter, said: “Apart from the complications of such a tax, it also risks sending out the wrong message.

“Government will be keen to project confidence and promote investment as the country seeks recovery from this crisis. “A ‘soak the rich’- style approach is unlikely to do much to achieve this. The proposals recommend a levy on anyone with assets over £500,000 – or £1million for a couple.

“That means that for a huge number of moderately affluent people, the valuation on their home may or may not mean they’re affected.

“Getting so many properties valued fairly and accurately would be a huge challenge. Similarly, how would you value an insurance or pension policy which may have cost a significant sum and pays a sizeable amount, but which isn’t sat as a capital sum in someone’s account?

“All of this complication means the tax would surely generate significant opposition.”

Robert Colvile of the Centre for Policy Studies, the think tank set up by Baroness Thatcher, said: “At a time when we need to be doing everything we can to attract investment to post-Brexit Britain, this kind of anti-business, soak-the-rich scheme is the last thing we need.”

The tax would be levied on homes, savings and investments, minus mortgages and debts, raising £52billion every year for five years – 10 times the annual inheritance tax take. It would represent the biggest such raid in UK history, dwarfing Tony Blair’s £5.2billion windfall tax on utilities firms in 1997.

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