Britain to suffer biggest exodus of millionaires in the world
The Government’s planned tax raid on non-doms could deter top talent – Jason Alden/Bloomberg
Britain is set to suffer the biggest exodus of millionaires in the world ahead of the Government’s planned raid on non-doms, analysis has found.
The share of the population who are millionaires is expected to plunge by 20pc over the course of this Parliament, from 4.55pc now to 3.62pc over the next five years, according to an Adam Smith Institute analysis of UBS forecasts.
This is in contrast to Germany, France and Italy, all of which are predicted to grow their share.
Wealthy residents are being driven away from Britain by factors including high taxes, changes to the non-dom rules and “a hostile culture for wealth creators”, the think tank said.
A £1bn crackdown on non-doms was one of Labour’s key manifesto pledges, with the party vowing to close what it claimed were “loopholes” in the system.
However, Ms Reeves is understood to be reviewing the policy amid concerns that it will force so many foreigners to leave that the measure could cost the UK vital tax revenues.
This latest research adds to growing evidence for the Chancellor to rethink the policy, with speculation also mounting that she will relax the rules around inheritance tax.
Nadhim Zahawi, who served as chancellor in 2022, called on Rachel Reeves to scrap anti-non-dom policies and ease taxes on wealth in her Budget later this month.
He said: “The rate at which millionaires are leaving the UK is a vote of no confidence in both our current tax and regulatory regime, and anti-business and anti-prosperity measures that could be coming down the line.
“These individuals are often entrepreneurs and business owners. Their exit won’t just reduce necessary funds for public services – it will decrease investment in the wider economy too.”
The Adam Smith Institute said that the very rich paid a disproportionate share of tax, so their departure was painful for the Exchequer. The top 1pc of earners paid 29pc of all income tax, the think tank said.
A HM Treasury spokesman said: “We are addressing unfairness in the tax system so we can raise the revenue to rebuild our public services. That is why we are removing the outdated non-dom tax regime and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK.”
In a separate report published on Tuesday, economists at the Centre for the Analysis of Taxation urged the Chancellor to impose an “exit tax” on entrepreneurs and business owners leaving the country.
Investors with shareholdings worth more than £5bn left the UK in the 12 months to April, they found, mostly going to countries with no capital gains tax (CGT).
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As a result, they estimate that the Treasury may have missed out on more than £500m of capital gains tax on those assets, which could instead be gathered with a charge on those leaving the country with unrealised capital gains.
Andy Summers, director of the Centre and an associate professor at the London School of Economics said nations including Australia and Canada impose this “exit tax” on people leaving the country.
“Charging CGT on people who leave the UK is not about punishing them for leaving. It’s simply saying: ‘you need to pay your bill on the way out’,” he said.
“Most of the UK’s international peers already do this, and there is no reason why the UK couldn’t as well”.
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