Taxing wealth/assets – some issues
- rpwills
- 2 hours ago
- 4 min read
One issue seemingly ignored by politicians and commentators alike is that different types of assets/wealth yield different levels of earnings if at all. The failure to understand this creates a situation where policies can be devised which create more problems than they solve.
Summary
There is a misconception that assets/wealth equate to affluence and that increases in value are in effect increases in income. But we could misquote the line from Anna Karenina in the novel of the same name by Leo Tolstoy - "All assets are alike; each asset is valuable in its own way."
Different assets have the ability to generate different levels of earnings while some do not generate any income. Dwellings are an interesting case. For owner occupiers who live in their property no earnings are obtained. However, if someone has another property used as a holiday let or let out to tenants the situation is different as earnings arise. [Owner occupiers can obtain more money if they move from say London to Cornwall when the difference in values creates a surplus].
Currently any income whether from dwellings, farmland, commercial property, interest on accounts and dividends is taxable. The difference between such earnings and earnings from employment is that the former are not subject o National Insurance Contributions.
The examples below indicate possible earnings from assets.
Information
Holiday lets
“According to the Sykes Holiday Letting Outlook Report 2026, the average UK holiday let owner’s gross income is approximately £25,600 per year*.”
[Coast and Country Cottages, April 2026].
“Most holiday let owners in Cornwall earn between £18k and £45k in gross annual income, depending on the location, property style and how well the home is managed. AIRDNA’s latest 2025 data shows average annual earnings ranging from £26k to £35k across Cornwall’s main destinations. Net profit varies widely, typically sitting between £8k and £25k, depending on fees, operating costs and pricing strategy. The biggest earners tend to be properties with excellent photography, smart seasonal pricing and consistent guest reviews.” https://holidayhost.co.uk/how-much-do-holiday-let-owners-really-earn-in-cornwall-2025/
Private rented properties
"The average gross buy-to-let rental yield for the UK in Q4 2025 was 7.18 per cent, compared with 6.99 per cent in the same quarter in the previous year."
“Data from HMRC, published earlier this year, shows that in 2022–23, private individual landlords generated a total table profit of over £25.6 billion on a turnover of £50.2 billion. With the average private individual landlord reporting a gross income of £17,665, this equates to an average profit of £9,021, having deducted finance costs of £2,799, among other elements.” [Savills , 2025].
“The median ISA holder (by income) had annual income of between £20,000 and £29,999 [2022 to 2023]”. [HMRC, 2025].
Farmland
“The average annual rent for Full Agricultural Tenancy (FAT) agreements, in current prices, decreased by 6% to £174 per hectare in 2024/25. However, after adjusting for inflation, the 2023/24 figure rose to £193 per hectare, meaning that the average annual rent fell by 10% in real terms.
The average rent in current prices of Farm Business Tenancy (FBT) agreements rose by 4% to £230 per hectare, however, this was a negligible change in real terms. Average rent for informal agreements rose by 8% in current prices, climbing to its highest nominal value in the last decade, £253 per hectare. In real terms, this was an increase of 4%.
The average rent for seasonal agreements increased by 2% to £166 per hectare in 2024/25. Conversely, this was a fall of 2% in real terms.”
[Defra, 2026].
Commercial property
“In 2024, the average rental cost of commercial property in England and Wales was £94 per square foot.
By 2034, commercial property in England and Wales is expected to cost £112 per square foot, on average, according to a rental forecast by Alan Boswell Group.” [Alan Boswell Group, 2025].
Offices are the most expensive type of commercial real estate to lease, with an average rental cost of £183 per square foot (2024).”
[Alan Boswell Group, 2025].
“5.89% Average prime yield at the end of January 2026.” [Savills, 2026].
Data from HMRC for the tax year 2023-24 gives the following results.
Source | Status | Mean |
Property | Net income | 12500 |
Banks/building societies | Income | 937 |
Dividends | Income | 17600 |
[HMRC, 2026].
Conclusion
Some assets generate income others such as a household’s own dwelling do not. Income from assets is currently taxed although as such earnings are not subject to National Insurance Contributions are effectively taxed at a lower rate than employment earnings.
Sources
Alan Boswell Group, (10th February 2025), Commercial Property Statistics 2025. https://www.alanboswell.com/resources/commercial-property-statistics/
Coast and Country Cottages, (20th April 2026), Are holiday lets a good investment, https://www.coastandcountry.co.uk/blog/are-holiday-lets-a-good-investment
Defra, (12 March 2026), Farm Rents in England, 2024/25 – statistics notice
Updated .
HMRC, (18 September 2025), Commentary for Annual savings statistics: September 2025, Official Statistics.
HMRC, (29th April 2026), Personal Income Statistics, Table 3.7: Property, interest, dividend and other income, tax year 2023 to 2024.
Savills, (28 July 2025), Lettings Spotlight: Market Trends – Q2 2025.
Savills, (19 February 2026), Market in Minutes: UK Commercial Investment.
UK Finance, (15th April 2026), Quarterly insight into Buy-to-Let lending, and trends in lending of borrowers accessing the market, 2025 Q4.