‘Britain is set to be the worst in the world’ is hardly something that any government wants to see blasted across the headlines. Unfortunately for Labour, this is exactly what the Adam Smith Institute’s (ASI) new analysis is telling us about how many millionaires are thinking about legging it out of the UK.
Specifically, we are set to lose the greatest proportion of millionaires in the world. By 2028, we at the ASI have forecast that we will have lost a fifth of them. To put that into perspective, that’s a greater proportion than China or sanctions-afflicted Russia. Taiwan’s share of the population, meanwhile, is set to rise by 51% and Japan’s by 31%.
Quite frankly, who can blame our millionaires? After all, we’ve been slowly making the UK a much less welcoming and attractive place to high-net-worth individuals (HNWIs). Our tax and regulatory regime is uncompetitive to say the least. The UK has the highest relative inheritance tax in the OECD. On top of the already sky-high tax burden, millionaires are now being threatened with increases in Capital Gains Tax, the abolition of the non-dom status and an exit tax, just to make sure the door hits them on the way out.
This is entirely a political choice – as has been evidenced by the fact the Government is still planning to press ahead with the ‘crack-down’ on non-doms despite Treasury concerns that it won’t raise any money.
Economics aside, the UK has also been making it pretty clear that millionaires just aren’t welcome here. Public opinion has shifted heavily against them since 2008 – and not just against wealth creators and business owners. Why be a big CEO in the UK, when you can do it in the US with more backing, goodwill and higher pay?
The recent mood at the thought of millionaires leaving the UK has been jubilant. ‘Britain’s millionaires are leaving. Good night and good luck I say’ crowed one Guardian columnist. ‘Dubai, you’re welcome to them,’ wrote another in The Times. ‘I think they should leave,’ said Dale Vince in an interview, because ‘if they’re not prepared to pay their fair share of tax in our country to live here, they shouldn’t live here’.
Are Britain’s wealth detractors right? If the UK becomes less attractive to rich people – then ‘so be it?‘ Well, they should be careful what they wish for. The top 1% in this country pays 29.1% of income tax – which is the Treasury’s biggest money maker, paying for public services and government projects. I’d say that is ‘paying their fair share’. If they leave the country, who do you think the Government will turn to to make up the shortfall? That’s right. It’ll be people like you and me.
Many millionaires are also wealth creators and investors. Private offices (companies which manage a millionaire family’s money) and angel investors leverage HNWIs wealth to domestically invest in UK’s startups for example. The more millionaires who leave, the worse the impact will inevitably be on our economy.
As a country, we need to have a serious conversation about whether this is the path we want to take. It’s entirely possible to create a system that both attracts wealth creators from abroad – and that helps more UK residents to become millionaires – while delivering decent public services. In fact, it’s bordering on impossible to do the latter without doing the former. Until our political class recognise this, they will simply continue to, as the old saying goes, cut off their nose to spite their face.
Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.
CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.
