Rachel Reeves could find around £10 billion a year to close half the Conservative budget deficit by raising taxes on unearned wealth, according to leading economists.

A recent study by the independent Resolution Foundation found that while Britain has seen a rise in wealth, the country is struggling with inadequate wealth taxes, presenting the chancellor of the exchequer to raise much-needed revenue by targeting the very richest.

The report highlights that wealth levels have risen from four times national income during Labour’s last term to six times national income today, despite recent interest rate rises. It also highlights the stark “wealth gap”, with families in the top 10% having £1.3 million more wealth per adult than those in the middle. Wealth inequality is almost twice as high as income inequality, and three in 10 families had less than £1,000 in savings before the pandemic, leaving them vulnerable during the cost-of-living crisis.

Despite the concentration of wealth at the top, wealth-related taxes remain low, accounting for only around 3% of national income. The report suggests that poorly designed taxes such as inheritance tax (IHT) and capital gains tax (CGT) are the main candidates for reform in Labour’s first budget, helping Reeves meet her budget rule of reducing debt as a percentage of GDP by the end of the parliamentary term.

The report points out that generous IHT reliefs allow the very wealthy to pay low effective rates, and curbing this could generate up to £2bn a year while promoting fairness. Aligning CGT rates with income tax rates could discourage tax avoidance, and raising CGT rates on shares to align them with dividend withholding tax rates could potentially raise up to £7.5bn a year.

These measures, which would collectively raise £9.5 billion a year, could help Reeves address the challenges facing public spending. Simon Pittaway, senior economist at the Resolution Foundation, noted that Britain has enjoyed a boom in prosperity, somewhat tempered by rising interest rates, with wealth rising from four times national income under Labour to six times today.

“But too many families have missed out on this prosperity boom. More than one in four people say they would not be able to cover an unexpected expense of £850, highlighting the fact that many families are missing out on the basic financial safety net that even moderate prosperity can provide.

Wealth taxes have also not kept pace.

“Modernising our wealth taxes, closing loopholes and reducing disruptive behaviour could improve the efficiency of our tax system and generate vital revenue for the exchequer.”

Stuart Adam, chief economist at the Institute for Fiscal Studies, said: “It would certainly be possible for the government to raise a few billion pounds through reforms to capital gains tax and inheritance tax.”

Both taxes, he noted, currently include exemptions that are difficult to justify, such as the exemption from inheritance tax on pensions upon death.