The wealth taxes that Labour could bring to Britain

Wealth tax rises worth up to £10bn are thought to be under consideration among Labour leaders.

Chancellor Rachel Reeves has previously stressed that the “current system of wealth taxation isn’t working”, and with the keys to the country’s finances likely going her way, change could be on the horizon.

While a wealth tax has been ruled out while on the campaign trail, murmurs of a crackdown on the rich fail to die down.

Wealth taxes have gained momentum overseas in recent years, giving Labour a number of examples to monitor.

Here, Telegraph Money looks at the taxes the party could take inspiration from.

Swimming pool tax

Owners of swimming pools in France are on average taxed an additional €200 (£170) a year. 

This is because pools are seen as extra real estate unless they are moveable or – in most cases – under 10 square metres in size. 

They must be declared to the local town hall at least 90 days before construction and must also be declared to the tax office, leading to higher local property tax bills due to the increase in a home’s rental worth.

In an effort to hunt down those who have not declared their pools, France has deployed artificial intelligence software to monitor aerial images.

The country is believed to have about 3.2 million private swimming pools, but there are thought to be more following a boom during the pandemic.

In the past year, French authorities have quadrupled the number of swimming pools detected with AI software. In new figures for 2023, the tax office reported an extra 140,000 property owners were “invited to regularise their situation” – bringing in an extra €40m (£33m) in tax revenue.

The surveillance method is soon to be rolled out further, in efforts to trace undeclared home extensions and patios or gazebos, which are also used to factor property taxes.

Pool cheats initially receive a written warning to revise their declaration or face a tax inspection or penalty. Under French law, an illegally built pool can lead to fines of €6,000 per square metre.

The French clampdown echoes a similar policy introduced in Greece in 2010 linking swimming pools to incomes. Shortly after its introduction, wealthy property owners started camouflaging their pools to hide them from local authorities.

There are thought to be around 270,000 privately owned swimming pools in the UK. 

The Labour-run Welsh government is already using satellites to spy on homeowners with big gardens, as it seeks to overhaul council tax.

It said it will introduce higher council tax bands and higher tax band rates to address “property wealth” and “rebalance” the current system.

Sir Keir Starmer has insisted that a Labour government will not change council bands in England, but he has praised the Welsh government’s plan as a “blueprint” for “what Labour can do across the UK”.

A net wealth tax

A simple form of taxing the rich to help the poor is to bring in an annual levy on an individual’s wealth.

Last week, French economist Gabriel Zucman published a G20-commissioned report outlining how a 2pc levy on the world’s approximately 3,000 billionaires could raise between $200bn and $250bn per year to combat global inequality and tackle the climate crisis.

Twelve countries in Europe previously levied a wealth tax on their richest inhabitants, but most were repealed in the 1990s and 2000s due to growing fears that in a globalised world, the wealthy would simply take their riches elsewhere.

France was the last to scrap its wealth tax in 2017, after losing an estimated 60,000 millionaires between 2000 and 2016.

However, wealth taxes do remain in a handful of countries and the levies have been growing firmer.

Last year, Norway increased its higher rate for those worth between Nkr1.7m (£125,700) and Nkr20m from 0.95pc to 1pc, a move again credited with driving some of its super-rich to abandon the country.

Meanwhile, Spain last year decided to impose a new “solidarity tax” at a national level, starting at 1.7pc on wealth over €3m (£2.5m), then to 2.1pc at €5m and 3.5pc at €10m.

In 2020, Argentina introduced a one-off levy on those with assets worth more than 200m pesos (£170,000) to help fix a fiscal hole left by Covid.

Also in South America, Colombian individuals with a net worth over approximately £515,000 pay 0.5pc tax, while those over a higher threshold face a 1.5pc levy on assets. 

Footballer Radamel Falco, a former Manchester United and Chelsea striker, said last month that the tax has influenced his latest career move. 

The 38-year-old is adored in the South American country and has signed for Millonarios FC, the club he supported as a child. But he told a Colombian radio station that he will only be staying for six months because he doesn’t want to pay the nation’s wealth tax.

Labour members have openly called on Sir Keir to impose some form of wealth tax, but he has denied he is planning to introduce such a policy.

Luxury SUV taxation

A green think tank warned earlier this year that the UK is “a tax haven” for luxury SUVs due to a soft approach on taxation compared with other European countries.

Analysis from Transport & Environment (T&E) found that tax paid when buying a new petrol or diesel SUV this side of the Channel is only a fraction of the levies on the Continent.

In regards to a BMW X5, one of the most popular SUVs on the market, the think tank said “its acquisition tax in the UK is £1,565, while in France, the same tax would amount to £51,415”.

The French taxation on high-emission vehicles is huge, and Ralph Palmer, of T&E, has urged Britain to go down a similar route.

“The Government is missing out on an equitable and easily actionable source of revenue by not targeting wealthy buyers of oversized, over-polluting SUVs,” he said.

Also in France, Parisians voted earlier this year to significantly increase parking charges for out-of-town SUV drivers to up to €18 an hour.

While not emission or size-based, Argentina has had a long history of hefty taxes on what it deems “luxury” cars.

It previously levied a 50pc tax on cars worth more than approximately $30,000.

Also in South America, Chile brought in an annual 2pc tax on certain luxury goods held in the country in 2022. 

Owners of yachts, helicopters and other manned aircraft with a market value of more than the equivalent of 8.5m Chilean pesos now face an annual levy.

Increased taxation on cars is already under way in the UK with the growth of zero emission zones.

Labour also plans to toughen up the approach to EVs, forcing more people to make the switch to battery power.

The party is poised to bring forward a ban on the sale of new petrol cars from 2035 to 2030, undoing a delay announced by the Conservatives.

Increased tax on second homeowners

British second homeowners don’t have it easy when it comes to tax, with the majority set to be charged double council tax next year.

There has been a multi-pronged attack, with the Budget having removed tax relief from those who run short-term holiday lets and new policies forcing owners to gain planning permission if a property is let out for more than 90 days a year.

Sri Lanka, however, is taking a different approach, with the Asian country set to introduce a new “imputed rental income tax” for second homeowners from next year.

The tax will be based on the estimated income a homeowner could earn if they rented out their second property, and taxes them on that potential income. It will be implemented from the second quarter of 2025.

The country’s Ministry of Finance said that the “focus of this tax is on high wealth individuals, and not on average income earners”. 

It said there will be a “suitable tax-free threshold to ensure that the tax is targeted on very high value property or multiple properties that are owned by wealthy members of society”.

Tax farmers keeping cows

In a world first, Danish farmers will soon face an annual tax per cow as part of a crackdown on emissions.

From 2030 farmers will have to pay 120 Danish krone (£34) per tonne of CO2, increasing to the equivalent of £85 per tonne in 2035, although a 60pc rebate will be applied.

According to the European Union, Denmark is a member state which “stands out as having high farm incomes”. On average, there are 207 cows per farm in the Scandinavian country, meaning the annual tax will be a major cost for hard-working farmers.

The government hopes the tax will help it reach its goals of cutting emissions by 70pc this decade.

In Britain, ministers have previously floated the idea of a tax on British agriculture but backed away from the levies in recent proposals to extend its carbon tax regime.

Danish taxation minister Jeppe Bruus is confident the policy can be a trailblazer. “We will be the first country in the world to introduce a real CO2 tax on agriculture. Other countries will be inspired by this,” he said.