Prosperity 2030 UCL · IGP Prosperity 2030
Appendix

P2030 Wealth Effects

Appendix Assisted · economics

Scope

This appendix sets out how the programme changes the distribution and composition of wealth. It states directions and mechanisms. Every figure is either internal to the programme, drawn from the cashflow and the named policy appendices, or taken from the public sources listed at the end. Where the direction of an asset-price effect is established by standard public-finance results but its size depends on assumptions the programme does not fix, the appendix states the direction and refers to the report's Property Tax, Stamp Duty and house prices appendix rather than substituting an estimate here. The programme levies no tax on wealth per se; the effects below operate through flows: the prices of assets, the return on them after tax, the taxation of their transfer, and the capacity of households to accumulate them.

Headline results

The base

ONS estimates total household wealth in Great Britain at £13.6 trillion (2020 to 2022), of which net property wealth is 40%, private pensions 35%, financial wealth 14%, and physical wealth 10%. The wealthiest 10% of households hold 41% of the total and the wealthiest 1% hold 10%. The UK dwelling stock alone is valued at £9.18 trillion, with London and the South East accounting for over 40% of that value on 26% of the homes. The Wealth and Assets Survey lost its official accreditation in 2025 and these figures carry corresponding uncertainty, but the orders of magnitude are not in dispute.

Housing: the capitalisation effect

A recurring tax on an asset is capitalised into its price: a buyer pays less for a property that carries an annual liability than for one that does not, by the present value of the liability they expect to bear. This is a long-established result in public finance (Oates, 1969), and it is the same mechanism by which the seller, not the buyer, bears the incidence of a transaction tax. The quantity that matters is not the headline 1% but the change in the effective annual holding cost relative to the present system, which already taxes property through Council Tax, whose effective rate falls as value rises (England Band D averages £2,280 in 2025-26), and through Stamp Duty, a transaction charge that amortises into an annual equivalent over a holding period.

The direction follows from where the effective charge rises and falls. At the bottom of the market, where Council Tax already exceeds 1% of value, the holding cost falls and values are supported; this is the report's Burnley case, where a modest terrace currently pays more Council Tax than a Kensington house. At the top, where Council Tax bears little relation to value, the holding cost rises and values are marked down. Abolishing Stamp Duty works in the opposite direction, because a transaction tax is itself capitalised and removing it supports prices (Davidoff and Leigh, 2013; Besley, Meads and Surico, 2014). Setting the recurring Property Tax charge against the recurring Stamp Duty stream it replaces, and the net effect on house prices is downward rather than upward. The direction is unambiguous; the magnitude is partial rather than full, depends on the discount rate, and is softened where owners take up deferral. The mechanics and a worked numerical example are set out in the report's Property Tax, Stamp Duty and house prices appendix.

The repricing has no mechanism for disorder. Deferral is available to every owner-occupier and settles on sale or transfer, with interest accruing at policy-linked rates, so no owner sells to pay the tax. The Right to Sell converts outstanding mortgages and first-time-buyer deposits not covered by a sale price into long bonds that protect buyers and lenders. And Stamp Duty abolition adds transaction liquidity, which the OBR's elasticities put at 8% to 20% more transactions, as the market finds its level.

The wealth that moves is unrealised. No household's bank balance changes on the day the tax begins. The mark-down falls on paper wealth concentrated in the top quintile, 84% of whom are owners, and on long-tenure owners whose holdings appreciated through decades in which house prices grew 150% while earnings grew 37%. The counterpart gain accrues to every household yet to buy, through smaller deposits and smaller mortgages: an intergenerational transfer of expected wealth executed without a transaction.

Land: the end of hope value

The reform of compulsory purchase extinguishes a second category of paper wealth: the speculative premium embedded in land held in anticipation of planning consent. Under the current regime the public pays landowners for value that has not been created, that depends on a regulatory decision the public itself will make, and that the owner has done nothing to produce. Pricing public-purpose acquisition at current use value writes that option value down to zero wherever the public is the buyer. The wealth removed was never granted by the planning system; the uplift from any subsequent re-zoning accrues to the community whose decision creates it. The direct beneficiary is the Community Housing programme, which delivers more dwellings per pound of capital; the wider effect is to lower the speculative floor under development land generally, reinforcing the housing capitalisation effect from the supply side.

Financial wealth: the return architecture

National Contributions replaces Income Tax, employee NICs, Capital Gains Tax, and Inheritance Tax with a single progressive schedule on all receipts. For the wealth held outside housing, about half the household total in financial and pension assets, the consequences run through after-tax returns rather than through prices.

Three design features do the work. First, capital gains are taxed as income at disposal, at marginal rates of up to 46% against the current 24% top CGT rate, but with a deduction for inflation since acquisition, so that only real gains are taxed; the schedule raises the charge on rapid nominal churn and can lower it on long-held assets whose appreciation has merely tracked prices. Second, the uplift at death is abolished: under the current system unrealised gains are wiped clean when the holder dies, making hold-until-death the rational strategy for large appreciated portfolios. Under NC, death is itself a disposal: the real gain to that date is charged as the deceased's income at the transfer, payable by instalments where the asset is land, so holding until death defers nothing and erases nothing. Third, dividends, interest, and every other return on capital face the same schedule as wages. The aggregate effect is the one stated on the face of the reform: on earned income, with the design held revenue-neutral, 69% of all workers pay less on their earnings, by an average of £2,000, with the balance arising because one rate set by total income applies to all sources alike, raising the charge on the sources the current system taxes more lightly.

At a transfer, two charges can fall due together on the same asset: NC on the real gain, owed by the estate on the growth the owner enjoyed while holding, and NC on the receipt, owed by the recipient on the wealth received. These are distinct economic events that share a date, not one pound taxed twice; the first taxes what the asset did for its owner, the second what it does for its heir. The current system reaches the same moment with a blunter instrument, a 40% estate charge above the nil-rate band, indifferent to who receives the wealth or what they earn. For a recipient of modest income the new structure is the gentler of the two: the receipt is drawn down and taxed at their own rate rather than the estate's flat one, and the estate's gain charge carries time to pay wherever the asset is land. The combined incidence at a single transfer will be sized in the model refresh later in 2026.

What this does not do is move asset prices much. UK securities are priced in global markets where the marginal investor is not a UK-resident individual, so the effect of NC falls on the rate at which large portfolios compound after tax, not on the level of the market. Pension wealth, the largest single component of household wealth at 35%, is taxed on drawdown as income, paralleling the current treatment of pension income.

Inheritance: from estate to recipient

The current Inheritance Tax raised about £8.2 billion in 2024-25 at a 40% rate above a £325,000 threshold, falls on roughly one estate in twenty, is forecast to reach £14.7 billion by 2030-31 on frozen thresholds, and is sufficiently relieved and exempted that its effective incidence bears little relation to its headline rate. NC abolishes it and taxes inheritance and large gifts as income to the recipient, with the option to shelter receipts in designated National Savings accounts and draw them down over time, taxed at the recipient's rate in the year of withdrawal.

The structural consequence is the deepest wealth effect in the programme. An estate-based tax is indifferent to how widely wealth is spread: the liability is the same whether a fortune passes to one heir or to fifty. A recipient-based progressive tax is not. A fortune passed intact to a single already-wealthy heir is taxed at the top of the schedule; the same fortune divided among many recipients of modest income, each drawing it down gradually, is taxed lightly, at each recipient's own rate. It follows that the structure carries a financial incentive to disperse wealth at death rather than concentrate it, an incentive the current estate-based tax does not create. Inheritance taxation stops being a levy on dying and becomes, in effect, a price on dynastic concentration, payable only by those who choose it. The same mechanism runs progressively: inheritances flowing down the income distribution are taxed least, and those flowing to the top most.

Corporate and monopoly wealth

The fiscal architecture states that part of the fiscal space is the captured margin of essential-service provision: the gap between what households pay at retail for energy, water, and connectivity and what those services cost to deliver, redirected from private shareholders to public purposes. That redirection has a balance-sheet counterpart. The retail layers of the regulated utilities hold equity value that capitalises those margins, and compressing the margin compresses the value. The size of the effect is bounded by the margins themselves and is not separately scored, but the direction should be stated rather than discovered: where the programme converts monopoly margin into public value, the shareholders of the monopoly bear the adjustment. That is not a side effect of the design; it is the design.

The public balance sheet

Wealth effects do not end at the household sector. The programme funds £14B a year of capital from current revenue, buses, depots, and the Community Housing programme (£10B a year, the report's stated target being 100,000 units), creating public assets with no matching liability. The repeal of Right to Buy converts the public housing stock into a one-way reservoir that grows through construction and Right to Sell acquisition and no longer leaks through statutory disposal below value. Zero new borrowing, with debt reduction a standing option for the £38B fiscal space, strengthens the other side of the ledger. The result is a sustained improvement in public sector net worth achieved from current income, which is, at the national scale, what saving is at the household scale. The Universal Services themselves function as a form of common wealth: assets every household can draw on without owning, whose value appears in reduced costs of living rather than on any balance sheet.

Where wealth formation moves

Drawing the mechanisms together: the programme marks down the paper wealth of incumbency, housing at the top, speculative land options, monopoly margin, and untaxed dynastic transfer, while leaving stocks untaxed and taxing the income of wealth on the same schedule as the income of work. At the same time it creates saving capacity where little existed, because the households whose disposable incomes rise, and whose essential costs fall by an average of £800 a year for households in the lower three quartiles, gain a margin from which financial wealth can accumulate, with National Savings as a designated vehicle. Accumulation at the top slows through returns and transfers rather than confiscation; accumulation lower down becomes possible through reduced costs rather than transfers. The implied direction is that wealth concentration narrows over time through differential rates of formation rather than through any levy on existing holdings. Wealth formation does not stop; it stops being a function of arriving early.

Conclusion: the net effect

The five mechanisms resolve into one statement. The programme produces a one-off repricing of private paper wealth, downward and concentrated at the top, alongside a lasting shift of wealth formation down the income distribution and onto the public balance sheet. The repricing is dominated by housing capitalisation, with smaller contributions from extinguished hope value and compressed monopoly margin; financial and pension wealth, about half the total, is largely unmoved in price. The repricing is almost entirely unrealised, none of it is collected as tax, and the deferral and bond mechanisms ensure none of it is forced into distressed sale. A magnitude is not asserted; the direction is, and the house-price appendix carries the mechanics.

The distinction that gives the conclusion its meaning is between paper wealth and real wealth. A house price is a claim on a dwelling that exists either way; marking the claim down destroys nothing physical. The programme lowers the price of incumbency while the real stock that price refers to grows: homes, a larger bus fleet, a retrofitted housing stock, network investment, and a public housing reservoir that no longer leaks. Measured private wealth steps down once and then compounds from a broader base; real national wealth, counting its public and common components, rises through the programme and beyond it.

The lasting effect is therefore not the level shift but the change in who accumulates. Compounding at the top slows, through returns taxed as income, the end of the death uplift, and inheritance priced on concentration. Accumulation lower down begins, through the saving margin that reduced living costs create. And the state accumulates on behalf of everyone, from current income rather than debt. The programme trades a markdown of the paper price of incumbency for a permanently broader base of those who hold the nation's assets, and adds to the real assets while doing it.

Sources

External figures are drawn from the following verified sources. All other figures are internal to the programme cashflow and the named policy appendices.

The capitalisation result (Oates, 1969), the evidence that Stamp Duty incidence falls on price (Davidoff and Leigh, 2013; Besley, Meads and Surico, 2014), and the OBR transaction elasticities are the references used in the report's Property Tax, Stamp Duty and house prices appendix, which this appendix relies on for the capitalisation treatment and refers to for magnitude.

All monetary figures are in 2025 prices and are either internal to the programme cashflow and the named policy appendices or drawn from the sources above. This appendix asserts directions and mechanisms; it does not attach magnitudes to the asset-price effects. HMRC reported 2024-25 Inheritance Tax receipts of about £8.2 billion; the Library and OBR figures reflect minor definitional differences.

Source: IGP Social Prosperity Network.

Related3 links across 1 group
Referenced by
Fiscal

Macro Economic Overview

Household Effect

Overall Effects

Household Effect

Property Tax effects

Published 11 June 2026 · Updated 13 July 2026