UK millionaires plan exodus to avoid Labour’s tax hikes

Millionaires are planning to leave the UK en masse to avoid Labour’s impending tax hikes, with a record number of wealthy Britons expected to exit the country this year.

Advisers to the UK’s wealthiest families report a surge in calls as clients prepare to leave, in response to Chancellor Rachel Reeves’ plan to increase taxes in the autumn Budget on 30 October.

Keir Starmer’s recent speech highlighted the country’s economic struggles, referencing financial ‘black holes’, and setting the stage for a challenging autumn budget.

Financial experts reveal that high-net-worth families are relocating to protect their assets, with some already having moved.

An anonymous tax adviser remarked, ‘I almost feel like I should contribute to the Labour Party because of what they’ve done for our business.’

Drivers also face potential fuel duty increases, and the Chancellor has set significant savings targets for government departments.

Sources indicate the Department of Health needs to find £1.3 billion in savings for the budget, while the Department for Education must save around £1 billion.

In Berlin yesterday, the Prime Minister expressed optimism despite his recent grim speech, stating, ‘This is actually a project of hope,’ while acknowledging the upcoming budget’s challenges.

Concerns are growing that Labour plans to increase taxes on pensions, property, and investments.

In his speech from the Downing Street rose garden, the PM said, ‘Those with the widest shoulders should bear the heaviest burden,’ indicating that wealthier households will face the bulk of the tax hikes.

Advertising mogul Martin Sorrell noted that his friends are leaving the UK, attributing the exodus to non-dom changes and anticipated tax increases.

Charlie Mullins, founder of Pimlico Plumbers, who has already moved to Spain, criticised the tax policies as ‘a typical socialist money-grab’ that would deter investment.

Reports suggest Rachel Reeves might align capital gains tax with income tax rates, raising the upper band to 45 per cent.

Capital gains tax is levied on the profit made when selling an asset, and it must be paid on various ‘chargeable assets’ such as valuable personal possessions, property not used as the main home, and certain shares.

Labour is also expected to target pension tax relief for high earners and may raise inheritance tax, currently at 40 per cent on estates worth over £325,000.

Inheritance tax rules specify no tax if the estate’s value is below £325,000 or if everything above this threshold is left to a spouse, civil partner, charity, or community sports club.

Individual Savings Accounts (ISAs) might also face changes, with a potential lifetime cap despite the annual amount remaining unchanged.

The UK could see a net loss of 9,500 millionaires in 2024, according to Henley & Partners. Tax and citizenship advisers report a sharp increase in enquiries about relocating to lower-tax countries since Labour’s election victory.

Popular destinations include Italy, Dubai, and Ireland. Peter Ferrigno of Henley & Partners noted a significant rise in queries post-election, emphasising the financial impact on clients.

An increase in capital gains tax would be ‘the last straw,’ driving more people to leave, Ferrigno said, describing the situation as ‘desperately sad.’

David Lesperance of Lesperance and Partners reported doubled enquiries about leaving the UK after Labour’s election victory and Rachel Reeves’ mention of a ‘fiscal black hole.’

Lesperance observed that the UK’s richest families are acting pre-emptively, likening it to fleeing a burning house before the fire is confirmed.

Jason Porter of Blevins Franks noted a palpable fear among millionaires, with many planning to move abroad to protect their assets and avoid tax hikes ahead of the autumn Budget.

Porter highlighted concerns over potential changes to capital gains tax, pension rules, and inheritance tax, particularly among those with a few million pounds in assets.

Former Tory business secretary Jacob Rees-Mogg warned that capital taxes could harm economic growth and drive investors away, branding it ‘socialist envy.’

With fuel duty hikes expected, the RAC predicts Reeves will raise fuel duty back to 58p per litre in the October Budget.

A 5p per litre cut in fuel duty was introduced by the Conservative government in March 2022, with the levy previously frozen at 57.95p since March 2011.

The Times reported Reeves warned that ‘public spending is not sustainable,’ setting detailed savings targets for various departments.

Several departments must find over £1 billion in savings, while others need to save hundreds of millions.

According to the Financial Times, over half of Britons disapprove of the new Labour government. A YouGov survey showed a surge in negative views of Starmer’s government, with approval ratings dropping from 29 per cent to 23 per cent.

Ipsos polling for the Financial Times revealed that three-quarters of the UK public expect Reeves to increase their personal taxes, up from just over half in May.