Recent findings suggest that a new tax imposed by HMRC could disproportionately affect state pensioners as the wealth gap in the UK continues to expand. According to a study conducted by the Resolution Foundation, the divide in wealth is increasingly driven by property gains and regional inequalities.
The research reveals that it would take a typical worker over 52 years of earnings, approximately £1.3 million in total, to ascend from the middle to the top of the wealth distribution. Molly Broome, a senior economist at the Resolution Foundation, highlighted that the current wealth gaps are so significant that even a full-time employee saving all their income over their entire career would struggle to reach the upper echelons of wealth.
Broome noted that the Department for Work and Pensions (DWP) has been prompted to consider wealth taxes due to soaring wealth levels and the urgent need for increased revenue, especially with the Budget approaching next month. She pointed out that property and pension assets now account for 80 percent of the total household wealth in the UK, indicating that any forthcoming wealth taxes are likely to impact retirees, homeowners in the South, or their families, rather than solely targeting the ultra-wealthy.
The Foundation warns that an impending wealth tax would primarily burden everyday homeowners and retirees, as opposed to just the affluent elite. Broome explained that the primary drivers behind the growth in wealth disparities since the early 2010s are escalating house prices and fluctuations in pension values, rather than individual actions like property purchases or asset accumulation.
Moreover, the stark wealth gaps raise concerns about wealth mobility in Britain, which remains severely restricted. The research indicates that approximately 76 percent of individuals from lower-income backgrounds do not experience significant movement—more than one decile up or down—in the wealth distribution within a four-year span.
