British Muslims Already Pay a Wealth Tax. Here’s How it Can Help Society

Tax justice campaigners have long argued for the taxation of wealth. British Muslim communities already pay a faith-based duty on wealth – providing a concrete example to government of how a wealth tax could benefit public services and take pressure off the state.

The 2025 Autumn Budget presented by Chancellor Rachel Reeves at the end of last year introduced several changes to taxation. The Chancellor unveiled a series of tax reforms that includes a council tax surcharge, or ‘mansion tax’, on properties over £2 million and a tax rise of 2% on property, savings and dividends. These changes reflect the growing calls by activists and campaigners to introduce a wealth tax. For example, Tax Justice UK have called for a 2% tax on assets over £10 million, projected to raise up to £24 billion a year for the Budget.  As the government balances funding vital public services without increasing income tax burdens on those struggling with the cost-of-living crisis, a wealth tax presents an opportunity to avoid both income tax rises and a return to austerity. 

Why tax wealth?

At the centre of the campaign for a wealth tax is the belief that those with the broadest shoulders should bear the heaviest burden. The aim is to help address the country’s economic challenges, such as ongoing issues of poverty and funding crises in the NHS. Wealth inequality in the UK is high. The combined wealth owned by half of the UK population (£466 billion) is equal to the wealth owned by the richest 50 families. This equates to 9% of wealth in the UK, whilst 43% is owned by the top 10%. However, there is currently no comprehensive wealth tax to address these inequalities nor tap into these vast amounts of wealth to support the provision of public services.

Widespread public support for a wealth tax

There is widespread public support for a wealth tax, with 75% of Britons supporting a 1% tax on assets over £10 million and 2% on assets over £1 billion. While some fear that wealth taxes may lead to an exodus of high-net-worth individuals from the UK, a review by Tax Justice UK challenged this view. The organisation contended that millionaires are highly immobile, with little evidence to show that taxes spurred any decision to relocate. 

Zakat – a 1400-year-old wealth tax

To Muslims, the calls for a wealth tax sound distinctly familiar. Zakat, the third pillar of Islam, is a mandatory duty on Muslims to pay 2.5% of their wealth (not including expenses or debt) above a basic threshold, to causes such as poverty alleviation. According to Islamic Relief UK, if everyone in the world who was eligible to give Zakat gave 2.5% of their wealth, it would generate trillions of dollars – enough to end extreme poverty and hunger. Whilst most British Muslims give their zakat through charities rather than a state, Zakat effectively operates similarly to a wealth tax, as it is mandatory for Muslims and applied at a fixed rate above a threshold. While differences between the two approaches exist, the underlying principles of Zakat and its redistributive nature align with the movement to tackle the UK’s inequalities that stem from wealth. The rate of tax proposed is also close to the 2.5% mandated by Zakat. It is also worth noting, whilst the average Briton gives £165 a year in charity, the average British Muslim gives £708 – over four times higher. Research shows that faith-based charitable giving helps fill gaps left by a struggling welfare state. Much of these contributions stem from Zakat, showing the potential of taxing wealth. 

For a new tax system that works for all

A wealth tax can be used to fund the welfare state and support those in need in the UK. With 4% of the population using food banks, the need for this wealth to tackle poverty and inequality in the UK has never been greater. The government’s commitment to strong fiscal rules and raising living standards for working people is a step in the right direction. A wealth tax could help support ongoing efforts to break down barriers to opportunity and end austerity. Existing practices of Britain’s faith communities can help inspire government policy that embodies fairness and opportunities for all.

Safa Al-Azami is a Policy Officer at a Manchester-based NGO. She is also a Research Volunteer for Equi.

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