Wealthy families flee Britain as Tory tax raids take their toll

·3 min read
Britain's most expensive house
Britain's most expensive house

Thousands of wealthy people have fled Britain in the last five years after a surge in inheritance tax bills and repeated raids by Tory chancellors.

The UK has lost 12,000 rich people since 2017 and is set to suffer more heavy net outflows of millionaires this year, according to research by migration consultancy Henley & Partners and data firm New World Wealth.

Experts blamed rising taxes, a darkening economic outlook and post-Brexit migration rules for the reversal that has knocked off Britain’s “wealth hub crown”.

Some 1,500 wealthy individuals — defined as having assets and cash of more than $1m (£830,000) — are expected to leave the UK this year based on the departures already in 2022.

Tim Fuller, associate director of Saunderson House, an investment service for high net worth individuals, said the exits are likely to increase further as frustration among the wealthy grows.

He said: “A lot more people are talking about leaving or making plans to leave in the not too distant future.

“There's a general sort of fear that we're now in a high tax, high inflation, low growth environment in the UK, relative to G20 peers so long term prospects here just don't feel that great.”

The exodus puts Britain in a club with despotic regimes and emerging economies this year, with Russia particularly hard hit. Britain has suffered a 1.6pc drop in the number of wealthy individuals in the last five years, the data suggests, down to 738,000.

Some 15,000 rich Russians are expected to leave their country based on outflows in the year so far as oligarchs feel the heat from Western sanctions. China and Hong Kong are also enduring large numbers of departures, the data suggest.

Andrew Amoils, head of research at New World Wealth, said an end to loopholes and high taxes, including on inheritance, have helped to drive the wealthy out of the UK.

He said: “A lot of the loopholes have been closed in the last five years or so, especially for the non-doms.

“The inheritance tax rates have always been an issue in the UK. With the exception of maybe France and Japan, they've always been higher than all the other countries globally so that's probably starting to become more of an issue.”

Chancellor Rishi Sunak has frozen income and inheritance tax thresholds for four years, dragging a record number of earners and more of estates into higher bands. Experts warn that losing the wealthiest individuals is damaging for an economy and the public finances as top contributors to tax revenue depart.

The top 1pc of earners paid 28pc of income tax and national insurance combined in 2018/19, up from 25pc in 2009/10, according to the Institute for Fiscal Studies. It estimates that the top 0.1pc pay at least 10pc of all income tax while the highest 1pc of earners account for a third.

However, support has been gathering for higher taxes on the richest despite fears it will drive out big contributors to government revenue. A YouGov poll suggests that 62pc of British people believe the rich are not paying enough in tax while surveys also indicate that a majority approve of a wealth tax.

As spending pressures rise, the Chancellor is raising the tax burden to levels last seen in the late 1940s under Clement Attlee’s Labour government. The Office for Budget Responsibility expects taxes to rise to 36.3pc of GDP by 2025-26.

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