In contrast, income tax rose around 15% during that time.
Despite this imbalance, Quilter tax and financial planning expert Gordon Andrews says the government will likely refrain from increasing income tax.
Avoid quashing growth
“Taxes on wealth, including capital gains tax and inheritance tax, have been increasing much faster than taxes on income and spending in recent years,” he said.
“As the government seeks to balance the books, taxation has been on the rise everywhere, but capital has been targeted more than income and spending. That can be unpopular since many people feel that once money is earned and has been subject to income tax, taxes on savings and wealth are effectively a second bite at the cherry for the taxman.
“However, tax on personal income and consumption still make up the lion’s share of total receipts to HMRC.
“From the government’s perspective, there is still plenty of scope to tax personal wealth, like savings and property, but they are loath to raise taxes on spending and earnings for fear of quashing economic growth and squeezing working households that have suffered from benign wage growth over the last decade,” Andrews added.
The stock market bull run and dramatic rise in house prices over the last decade mean that “capital owners have enjoyed a boom and now look a ripe opportunity for HMRC”, he warned.
“The net result is that despite the unpopularity of inheritance taxes and alike, the chancellor will likely continue to seek opportunities to tax individual personal wealth.
“For savers that want to plan ahead, that means it is going to be really key to get professional tax planning advice to ensure you are managing your financial affairs efficiently.
“There are plenty of legitimate tax planning opportunities – diverting monies to a pension, using savings and investment allowances, inheritance tax planning – that can be put to use,” Andrews said.