Ultra-high net worth individuals look for ways to avoid possible equalisation of capital gains tax with income tax
Daily Telegraph 13/07/26
Wealthy Britons are preparing to leave the country if Ed Miliband becomes chancellor and launches a new tax raid on the rich, The Telegraph can reveal.
Ultra-high net worth individuals based in the UK have contacted international tax advisers looking for a way to avoid the possible equalisation of capital gains tax with income tax in the first months of Andy Burnham’s government.
Mr Burnham – who has said the country has “overtaxed jobs [and] undertaxed wealth” – is widely expected to launch a review of CGT ahead of his first Budget later this year.
Although the incoming Labour leader has pledged to remain within the party’s manifesto pledges on tax, including not to raise VAT, income tax or National Insurance, he is thought to be considering a range of changes to personal taxation.
They could include the equalisation of CGT with income tax, which has become a popular policy on Labour’s soft-Left, and a new 50p top rate of income tax.
Mr Miliband is now considered the front-runner in the race to become the next chancellor, although City bosses have warned that he would be treated less favourably by the markets than a more centrist choice such as Shabana Mahmood or Wes Streeting.
The Telegraph understands that entrepreneurs are preparing “escape plans” to leave the country if Mr Miliband succeeds Rachel Reeves this month.
David Lesperance, an international tax adviser to the super-rich, said his clients had begun to make plans to remove their assets from the UK, fearing higher rates of CGT and an exit tax to capture fleeing millionaires.
“My clients are concerned that, with the proclamations from both Andy Burnham and Ed Miliband, there will be a massive increase in CGT and possibly an exit tax as well,” he said.
“These people were concerned about Labour at the last election, and they have still got their escape plan set up. Now I’m getting more people setting up escape plans.”
Mr Lesperance said that there was now a “dramatically increased chance” of higher rates on capital gains, which many wealthy Britons feared would be introduced when Labour took office in 2024.
Research by Henley & Partners last year estimated that 16,500 wealthy people had left the country under Labour, although the report’s data was skewed towards richer millionaires with more than $1m in liquid assets.
In a speech designed to reassure nervous investors who believed he may breach Labour’s fiscal rules, Mr Burnham said last month that he would be cautious on spending and borrowing when he took office.
But he has also been bullish on personal taxes, arguing that the “era of trickle-down economics” has failed the country and calling for higher taxation on wealth.
That could include a mansion tax, which Mr Miliband supported as Labour leader, in the form of higher rates of council tax for properties worth more than £1.5m.
The equalisation of CGT with income tax has previously been rejected by the Treasury amid concern that it would end up raising less money than the current regime.
The impact of the policy has been debated among economists, with estimates ranging from a Treasury loss of £8bn to a gain of £14bn.
Labour has previously been stung by the unexpected cost of its tax changes, including over the decision to impose VAT on private schools, which could cost up to £10bn, according to some Right-wing economists.
Ms Reeves’s decision to abolish non-dom status for wealthy people living in the UK is estimated by the Office for Budget Responsibility (OBR) to raise around £12bn over the next five years, although experts have said it could result in a £10bn loss to the taxpayer because rich taxpayers will leave the country.
Sir Mel Stride, the shadow chancellorr, said: “Labour’s war on wealth is becoming a war on growth. If Andy Burnham fails to rule out yet more tax rises, we are in for another summer of damaging speculation, which will see investors and wealth creators leaving the country.
“Burnham and the people around him need to understand that they are already having an impact on our economy by talking up the prospect of a fresh tax raid, like the rumoured plan to raise capital gains tax.
“The Conservatives will reverse Labour’s anti-growth agenda and attract talent and capital back to the UK.”
Comments
Post a Comment