Banding

A banded tax regime may help alleviate the valuation challenges of establishing the exact value a taxpayer’s total wealth. This paper explores how the distribution and composition of wealth in the UK affect the prospects of designing a palatable banding regime in practice, with different policy aims suggesting different design features. A banded regime is more effective at accommodating valuation uncertainty around numerous small items than it is for high-value assets such as a private business. In addition, allowing for more uncertainty in valuation through wider bands comes at a cost of higher inequity amongst taxpayers with relatively similar levels of wealth.

DOI: 10.47445/147
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