Household wealth in the UK has doubled as a proportion of national income over the past 25 years. The source of this increase has implications for how and when to tax wealth. Wealth can accumulate through active savings but also as the result of falling interest rates that magnify the present value of assets that yield an income. I show that the increase in wealth of the past 25 years has overwhelmingly been driven by falling interest rates, especially for pensions and housing which account for the large majority of household wealth. I discuss several implications for existing taxes on wealth and for a wealth tax.
