UK Tax Reform Puts Older Wealth Under Tax Pressure

Britain faces a fresh debate over tax as a new plan calls for more tax to fall on older people and property owners. The idea comes as the country faces higher costs from an ageing population. It also comes as Prime Minister Andy Burnham has left the door open to tax rises in the autumn Budget.

The plan was set out by the Institute for Public Policy Research. It says the tax system puts too much weight on people who work. It says more of the burden should move to wealth and property. The aim is to raise money while easing pressure on younger workers.

The report was written by Oxford professor Ben Ansell. It warns that ageing will be the main source of pressure on public funds in the years ahead. The report says people aged over 65 made up 14 per cent of the UK population in 1974. That share was 18 per cent in 2024. It could reach 27 per cent by 2074.

The change has a clear cost. The report says state pension spending could rise from about 5 per cent of national output to 7.7 per cent if benefits stay at current levels. Health and social care costs would add more pressure. Together, the report says ageing could add almost 10 per cent of national output to public costs by 2075.

The proposal would change how Britain raises tax. One idea is to extend the 2 per cent National Insurance charge to older earners. Pensioners who still earn from work do not now pay that charge. The plan would bring more older workers into the system.

Another idea is a new property tax. It would replace council tax and stamp duty with one tax linked to the value of property. The suggested rate is about 0.65 per cent. The report also calls for capital gains tax to move closer to income tax rates. It says an investment allowance could protect normal returns.

That choice could also affect house prices and family wealth. A property tax would change the cost of owning a home. It could shift tax from buying a home to owning one. That would be a major change for many households.

The debate is likely to be hard. Many older people own homes and have built wealth over many years. A new property tax could affect people who have valuable homes but modest cash income. Changes to National Insurance could also affect older people who stay in work.

Supporters of the plan say the current system is not fair across age groups. Younger workers often face rent, house prices and student debt. They also pay taxes through work. Older households are more likely to own property. The report says tax policy should reflect that gap.

The issue also links to the wider plans of the new government. Burnham has promised higher defence spending and major changes to social care. Those plans need money. He has said he will not ignore the state of the public finances. That has added to talk of tax rises before the autumn Budget.

The report also looks beyond the next Budget. It warns that artificial intelligence could change work and reduce the need for some jobs. That could weaken tax income from wages. It says future governments may need a tax system that can raise money from a wider range of wealth and activity.

The debate is now moving from a question of whether tax should rise to a question of who should pay more. The answer will shape how the UK funds pensions, health care and social care. It may also shape relations between younger workers and older property owners.

For now, the proposals are not government policy. They are a call for reform from a policy group. The final choices will rest with the government and Parliament. But with the population ageing and public costs rising, tax reform is set to remain a major issue in British politics.