Record number of millionaires to leave UK as top academics join calls for exit tax
The UK is set to lose the greatest proportion of millionaires in the world in the next four years, new analysis suggests, as a group of respected academics joined growing calls for Rachel Reeves to introduce an exit tax at the upcoming Budget.
The Adam Smith Institute’s (ASI) Millionaire Tracker – a new initiative from the right-leaning think tank – predicts that the share of the UK’s population who are millionaires will plummet by 20 per cent before 2028.
The sharp drop makes the UK a major outlier in the 36 countries that the study examined, most of which can expect the proportion of their population that are millionaires to rise over the next four years.
The next biggest loser is the Netherlands, the study found, whose population of millionaires as a share of the overall population will fall by five per cent. Saudi Arabia is set lose the third highest proportion of millionaires.
The findings add to fears that the UK is struggling to attract and retain wealthy residents, who contribute a disproportionately large amount to the UK’s overall tax take.
Former Chancellor Nadhim Zahawi, who is a patron of the ASI, said: “The rate at which millionaires are leaving the UK is a vote of no confidence in both our current tax and regulatory regime, and anti-business and anti-prosperity measures that could be coming down the line.
“I urge the government to rule out anything in the Autumn Budget on 30 October that could drive them away even more.”
The analysis comes as two top academics used a new report to throw their weight behind growing calls for the introduction of an exit tax to help stem the number of millionaires and investors looking to leave the UK in a new report.
Arun Advani and Andy Summers, associate professors at the University of Warwick and the London School of Economics respectively, said the UK should join the likes of Australia and Canada by charging capital gains tax (CGT) on people who leave the country.
The study, which was published by the Centre for the Analysis of Taxation (Cen Tax) and combined Companies House data with information on the Orbis database of company values, found that three-quarters of people who leave the UK, go to countries where they can sell their business without paying any tax on the gains they made in the UK.
This acts as an incentive for successful millionaires and billionaires to emigrate before they crystallise any capital gains, the study said.
The paper comes shortly after two influential think tanks – the Institute for Fiscal Studies and Resolution Foundation – proposed a similar exit tax, found that 10 wealthiest ‘leavers’ in the last year accounted for 73 per cent of potential revenue. This means the government could afford to exempt anyone with gains below £1bn. Cen Tax said.
“Charging CGT on people who leave the UK is not about punishing them for leaving,” Summers said. “It’s simply saying: ‘you need to pay your bill on the way out’. Most of the UK’s international peers already do this, and there is no reason why the UK couldn’t as well.”