DeVere Group is distributing a release that claims that 42% with UK financial ties want out of Britain. This follows the recent Labour budget, which aims to increase taxes on various aspects including capital gains. While DeVere did not distribute the complete survey and its methods, which would add credibility, the organization claims that 600 individuals were surveyed worldwide, many of whom indicated they were looking to move assets elsewhere besides the UK.
The company claims:
“The survey’s findings reveal a seismic shift in attitudes toward the UK’s financial environment. Families, business owners, and investors with UK financial connections are exploring options to mitigate the impact of the new tax landscape, which includes higher capital gains and inheritance tax changes on pensions, the abolition of non-domiciled tax status, and increases in National Insurance Contributions (NIC).”
The report claims that individuals are looking at Italy, which has some beneficial programs, as well as Dubai, Switzerland, Portugal, and Malaysia as alternatives to the UK.
The Laffer Curve explains that when taxes get too high, people will vote with their feet and seek to mitigate the heightened costs of high tax jurisdictions and move their money elsewhere. If costs are exceptionally punitive, this may cause tax revenue to decline. There are empirical examples of this happening.
A recent report by the Tax Foundation shares that Spain and Germany have hit a high tax rate threshold, and any tax increase does not generate a significant increase in tax revenues.
The Labour government has bluntly stated it seeks to fill a “black hole” of a budgetary shortfall. Policymakers deem it too difficult to grow their way out of the lack of revenue, and cost-cutting can’t do the trick.
DeVere claims that the Government is telling investors and high-net-worth individuals that they are no longer welcome in the UK.
Much of this is supposition, but if the Labour policy ends up being wrong – it will probably be too late.