Michael Moore's Outlook on the need to slay the idea of a ‘wealth tax’

Don’t you just love the guilty pleasure of checking the dictionary to find out what a word means? Or the relief after double checking you got one right?

In an era of generative AI (not forgetting its distant, older cousin, predictive text), this may seem like a gloriously old-fashioned indulgence. After all, at the point where we out-source content creation, and sub-contract sentence completion, who may care which words are used or how?

For now that’s perhaps a little pessimistic. And probably will remain so in a world where, never mind the entirety of the creative arts, there are plenty of professions (such as the law), or vocations (such as politics), which will always depend on the precision, or creative use, of words and language.

Private capital is no stranger to all of this. After all, a medieval merchant shipping term, ‘carried interest’, was long ago borrowed creatively to describe the mechanism which shapes how investment professionals are incentivised. And in recent decades it has been defined in ever more precise terms in the countless contracts which determine the rewards people receive.

Let’s set aside, for now, the need to replace the arcane ‘carried interest’ idea with a more modern, and relevant concept like ‘shared equity’ (which would better describe the reality that the industry creates capital value in the funds it manages). After a year of continuous engagement with the UK government on the taxation of ‘carry’, the urgency has gone.

Mind you, by the time the tax treatment comes round for another major review (taking the government at their word that they plan a period of predictability for the rest of this parliament), we would do well to have resolved the linguistic tensions which complicate a rational and speedy consideration of the issues.

But in the meantime another definitional nightmare stares us in the face. What, lots of people are asking, is a ‘wealth tax’? And is it really something the UK government is contemplating? While we are at it, how did this even become a thing we have to think about?

Starting with that last point, the answer lies somewhere in the weeks before the UK parliament’s summer break. The government’s public policy priorities became clearer in the Spending Review published in the middle of June. As did the fiscal constraints the UK is under, with projections showing that meaningful economic growth remains challenging, and relief from tough spending choices may be some way off.

And then there was the parliamentary revolt on welfare reform, anticipated in last month’s column, which added some very costly changes to public spending in the future. If the headroom in the public finances was already tight, it immediately became wafer thin, or non existent. Tax rises loom.

The guessing game about which taxes, how much and when, is complicated by the long list of taxes (like income tax and VAT) which Labour pledged not to increase. Which brings us to a ‘wealth tax’.

Those promoting the idea like the creative freedom the term offers, or, put another way, the absence of any precision in defining it. Similarly, there is the none-too-subtle suggestion that it is ‘other’ people who will pay it. With a neat symmetry, anybody who thinks they might be on the receiving end of a ‘wealth tax’ abhors the idea for the opposite reasons.

In a climate where investment is essential to kickstart economic growth, the loose talk of a ‘wealth tax’ risks serious damage to investor confidence – for founders, entrepreneurs and their private equity or venture capital backers. The proposals from some quarters of an ill-defined tax on assets cuts across the consistent message from the government on UK competitiveness.

At a time when there have been questions raised about the attractiveness of the UK’s tax arrangements for investors (domestic as well as international), even the suspicion of a ‘wealth tax’ on the horizon is counter-productive.

So is it real? And if not, why not say so? Privately Government appears to be pushing back strongly on the idea. A public rejection of it would complicate the politics of the moment and invite questions about what other taxes might be raised. Not easy, but somehow that square needs circled. And soon.

Words, and their meanings, matter, as all of this shows. Going back to my dictionary browsing, one of my favourites is ‘chimera’ and it’s apt for this moment  – it originated in fables to describe a fire-spouting monster. In more modern contexts, it describes ‘any idle or wild fancy’, according to my Chambers dictionary.

As far as a ‘wealth tax’ is concerned, we must hope it is the latter, rather than the former, and remains mythical for a very long time to come.

Michael Moore
Chief Executive, BVCA

This article was originally published on 11 August 2025 on the Private Equity News website here.