CIOT/CenTax Labour fringe debate: Can we design a tax system which taxes the wealthy and is pro-growth?

The panel

Emma Chamberlain, Barrister and Co-Chair of CIOT’s Private Client (International) Committee
Lloyd Hatton MP, Member of the House of Commons Public Accounts Committee
Nichola Ross Martin, President, CIOT (chair)
Arun Advani, Director, Centre for the Analysis of Taxation (CenTax)
Gemma Tetlow, Chief Economist, Institute for Government

The context

Wealth taxes surged up the agenda in Labour circles this summer as some in the party, including former leader Neil Kinnock, threw their weight behind a proposal for a levy on the assets of the very wealthiest. Would such a tax provide a fair way to pay for public services or would it risk driving away investors and wealth creators?

And what about the ‘wealth taxes’ we already have. The government has scrapped non-dom tax status, raised capital gains tax and is limiting inheritance tax reliefs. Is this the right approach? And could it go further in some of these areas?

Those were some of the questions that framed CIOT’s 2025 Labour Conference fringe debate, held this year in partnership with the Centre for the Analysis of Taxation (CenTax).

^{We apologise for a loss of focus in the video of this recording from 19-33 minutes.}

The debate took place on Tuesday 30 September 2025 at the Hilton Hotel in Liverpool. The chair, Nichola Ross Martin, opened proceedings by welcoming the packed audience, and explaining why CIOT and CenTax were hosting the debate.

Gemma Tetlow highlighted the fiscal challenges facing the government, noting the “genuine fiscal sustainability constraints” requiring spending cuts or tax increases. She pointed out that further reductions in public spending would be “difficult and odd” given the recent spending review, making tax rises the more likely course of action.

Tetlow observed that while a wealth tax “sounds very attractive” to the public, this appeal is partly because it is perceived as “a tax on someone else”, as most people do not consider themselves wealthy when asked directly. She emphasised the importance of the government clearly defining its objectives for any wealth tax, backing policy decisions with evidence, and warning about the potential behavioural responses from wealthy taxpayers, who “have options” to manage their tax liabilities in response to policy change.

Arun Advani argued that the UK’s tax system is “so badly designed” that tax reform can create opportunities to promote growth and simultaneously increase revenues. He proposed reforming capital gains tax to provide business investors and risk takers with a tax-free allowance he argued would be “good for growth”.

Advani also questioned the effectiveness of the government’s non-dom reforms, arguing they disincentivise investment in the UK and that they could be redesigned to encourage inward investment. Returning to the inefficiency of the UK tax code, he said: “there are so many places in the current UK tax system where we are not prioritising growth and raising revenues. We can make the system better.”

Emma Chamberlain said the abolition of non-dom status and the end of the remittance basis represented a “move to simplicity”. She called for a longer-term approach to the taxation of wealth, arguing that a well thought out roadmap would create growth opportunities and provide greater certainty and stability for affected taxpayers.

She contrasted this with the “whack a mole” approach of successive governments, which had created instability and uncertainty for wealthy individuals who “hated” not knowing the implications for them. She also criticised sections of the tax code for being “genuinely impenetrable”, even for tax experts, telling the audience: “if you can’t agree what a tax system means, it is a very bad state of affairs”.

Chamberlain also noted that a global wealth tax was “never going to happen quickly”. She floated the idea of encouraging people to come here by offering a facility that they pay a fixed annual lump sum tax for a period which is agreed in advance in exchange for certain tax exemptions (except on earnings), with the lump sum increasing in bands for those here longer and those with higher levels of wealth. The certainty and simplicity offered by that option would be very attractive even if the annual lump sums were high.  

Lloyd Hatton MP centred his remarks on HMRC’s approach to enforcement, expressing concern about its difficulties enforcing and maintaining existing rules.

He suggested HMRC lacked the necessary information, skills, resources and appetite to ensure that the wealthiest pay their fair share. Hatton said it had been “bizarre” to hear officials tell a meeting of the Public Accounts Committee that they did not know how many billionaires there were in the UK or how much tax they paid.

He was also sceptical of HMRC’s tax gap figures, suggesting that they ‘do not hold water’. He was particularly vexed with HMRC’s estimates of the offshore tax gap, describing the £300 million figure as “meagre” and questioning its accuracy following media reports that Roman Abramovich could owe HMRC as much as £500 million alone. He told the audience: “I don’t think any of us can think HMRC is up to the job” if it lacks the necessary data and information.

Hatton said he hoped the Labour government would reverse the “sorry track record” of the previous Conservative government when it comes to enforcement, but he also argued that HMRC “has (enforcement) powers and chooses not to use them” and questioned whether it had the right culture to pursue tax avoiders.

He said the public was generally happy to pay tax but “begrudged” it when it seemed others were out to game the system. His aim was clear: that “everyone pays the right amount of tax”.

Q&A

Some of the topics covered in the Q&A that followed included:

Wealth tax design

Arun Advani suggested that any future wealth tax be set with a high threshold to minimise the volume of taxpayers so that full market valuation was possible, and that it should avoid shortcuts and exemptions that would increase its complexity.

In contrast, Emma Chamberlain noted the success of the Swiss approach to wealth taxes, with levies being set at a local and low level to discourage avoidance. Chamberlain also told the audience that the abolition of non-dom tax status would give the government a better picture of the extent of wealth in the country, leading to better policy choices as taxpayers are required to disclose their wealth to HMRC.

Gemma Tetlow noted that “to do this well would be a very long process”, perhaps taking up to four years to implement. She said this could make it politically hard to deliver.

Tax avoidance and the Overseas Territories

Arun Advani said that the UK had already issued Orders in Council to increase tax transparency. These were being ignored, meaning that enforcement was needed.

Council Tax reform

Asked about the prospects for reform, Emma Chamberlain said it was possible, but the Treasury isn’t that interested because the revenues aren’t going to them. But she warned the audience that a consequence of any tax reform is that “losers shout louder… you never hear the winners.”

HMRC reform

Lloyd Hatton said he hoped HMRC would use the additional investment it received at the Spending Review to focus on the super wealthy and not just the ‘low-hanging fruit’. He also called for a review of tax reliefs to give a more accurate picture of their effectiveness.

Emma Chamberlain said that the “proliferation of useless reliefs and complexities” was a consequence of the budget process and political deal-making. She wondered whether “maybe not having an annual budget process where a Chancellor feels the need to announce a new relief every year would help simplification”.