Labor tax is shifting Britain’s wealthiest out, BDO research has revealed
Many of Britain’s wealthiest people are considering whether to leave the country, driven not so much by the tax rate but by what they see as a government unable to provide a stable financial framework.
A survey of 200 billionaires, each with a fortune of at least £50m, by accountancy firm BDO, found that two-thirds had considered relocating in the past twelve months. The most striking finding, however, was the reason: 42 percent identified inconsistent tax policies as the main reason for their negotiations, while just 18 percent cited higher tax rates only.
The difference is important. Britain taxes at the same or higher rates than its European neighbours, yet the richest have historically remained so. What seems to have changed the numbers is a succession of policy reversals and threatening reforms under Labour, particularly around inheritance tax and capital gains tax, which have left wealthy people unable to plan with confidence.
Elsa Littlewood, tax partner at BDO, said many of those considering leaving would prefer to stay but feel unable to manage long-term wealth planning against an unexpected backdrop.
Since Labor came to office, a series of high-profile departures has reinforced the trend. Hedge fund manager Michael Platt has moved his family office to Dubai. Norwegian-born shipping magnate John Fredriksen has put his £250m Chelsea townhouse on the market. Richard Gnodde, who was Goldman Sachs’ biggest banker in Europe, moved to Milan, while brothers Ian and Richard Livingstone moved their main residence to Monaco. Indian billionaire Lakshmi Mittal, a British citizen for nearly three decades, also moved to Dubai, as did Egyptian businessman Nassef Sawiris.
Emigration began in earnest when Rachel Reeves, when she was Chancellor, ended non-resident status, the long-standing tax regime that made Britain an international wealth attractor. The proposed 40 percent inheritance tax on worldwide assets provoked such strong opposition that it was later dropped, but by then confidence was gone.
Ms Reeves’ second budget in November added uncertainty. After hinting at a possible increase in capital gains tax, he ultimately left CGT untouched but raised rates on savings and dividends and introduced what critics called a “huge house tax” on high-value properties, a set of measures few had expected.
Maxwell Marlow, director at the Adam Smith Institute, warned that the absence of any plan to attract wealthy investors and spending in Britain means that the population will face the costs.
For Business Matters readers who run or advise businesses that depend on access to capital, the message from BDO’s research is clear: it’s not the size of the tax bill that’s putting people off, it’s not knowing what that bill will look like next year. Certainty, it seems, has become a rare commodity in British monetary policy.
