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I'm A UK Millionaire – Get Me Out Of Here, Think Tank Says
In the approach to the 30 October UK budget, a report from an economics think tank says that HNW individuals are hitting the exits amid concerns about rising taxes.
At a time when the UK wealth industry is bracing itself for tax
hikes on affluent and high net worth individuals in the 30
October budget, figures from the Adam Smith
Institute this week say that millionaires want to get
out.
The free market think tank said in a report that the country is
set to lose the greatest proportion of millionaires in the world
in the next few years. The share of the population who are
millionaires will fall by 20 per cent by 2028, the ASI
said.
Today, 4.55 per cent of UK residents are millionaires; the ASI
has forecast that this will fall to 3.62 per cent by 2028.
“The fact that the UK is losing proportionately more millionaires
than China or Russia is a worrying indicator of our economic
health and growth prospects,” the think tank said in a statement.
“Many millionaires are wealth creators who set up businesses and
employ people across the UK.”
UK Chancellor Rachel Reeves is expected to hike taxes on savings
and forms of capital – possibly increasing capital gains tax
to match income tax rates – and squeeze exemptions on
inheritance tax.
The government – following the stance of the previous
Conservative one – is also planning to end the UK’s resident
non-domicile regime, shifting to a residence-based system with a
four-year period of no tax on forms of wealth for those who have
lived abroad for at least a decade and want to come to the UK.
There’s speculation that Reeves might soften the way that the
system is changed, such as how inheritance is treated, amid
fears that scrapping the non-dom system won’t raise net revenue
if there’s an exodus.
The ASI report adds to concerns that the UK has reached the upper
limits of how high taxes, as a share of GDP, can go before they
reduce, rather than raise, more money. The argument, sometimes
known as “supply-side” economics, says that there is an optimum
tax level between zero and 100 per cent, and that many major
countries’ tax codes are beyond the ideal point. At issue are
arguments about fairness versus economic growth and
efficiency.
At a time of greater capital and human mobility, jurisdictions
such as the United Arab Emirates, Portugal, Malta, Switzerland,
Singapore and Italy are competing to attract affluent people with
a variety of schemes, including so-called “golden
visas,” and various types of programmes offering
residence/citizenship in return for investment.
The ASI said that millionaires are leaving the UK for a number of
reasons, including high levels of current taxation, threats of
further increases, and a hostile culture towards wealth-creators.
(For a report about hostile attitudes towards the rich, see this
WealthBriefing review
of a study of attitudes to the rich, by Rainer Zitelmann, a
Germany-based sociologist and entrepreneur.)
The ASI has built a “Millionaire Tracker” which calculated the
proportion of the population who are millionaires, and how this
is forecast to change over time.
Stephen Abletshauser, international private wealth partner at
Spencer West, a London-based law firm, said clients are seriously
considering quitting the UK.
“If capital gains tax is indeed equalised with income tax,
material proportions of wealth generators will without doubt
leave the UK for many years,” he said. “This will only further
exacerbate the tax gap. There is a feeling that the social
contract is broken in that double taxation in the form of
Inheritance tax is deemed ‘fair’ whereas successive governments
do not address the fact nearly a quarter of households pay no
income tax and only 11 per cent of the working age population
pays more than basic income tax.”
“We are a far more mobile society culturally and economically
than 10 years ago even. The global competition for wealth
generators to relocate to their jurisdiction is fierce and the
likes of Greece, Spain, Italy, Portugal, Singapore, the UAE, the
Caribbean, and the USA will benefit from ill-advised tax grabs,”
Abletshauser said.