Since the change of government in July of last year, the new tax increases in the Labour Party’s budget have led to a record exodus of millionaires from Britain, which was previously a destination for investors, further damaging the European country’s economy.
Tax Flight
Prime Minister Keir Starmer’s policies have sparked public anger over the Labour Party’s tax plans, which are driving international and domestic investors out of the country, according to analytics firm New World Wealth.
In 2024, 10,800 millionaires left Britain, or one millionaire every 45 minutes.
Among those leaving were 12 billionaires and 78 individuals with net worths exceeding $100 million. The number of millionaires emigrating from Britain last year increased by 157% compared to 2023, meaning it lost more wealthy individuals than any other country.
Blame Game
The Labour government has blamed the previous administration for the economic challenges facing Britain, including a mass exodus of wealthy individuals following recent tax increases.
Tax advisors have reported a surge in wealthy Britons considering leaving the country, citing concerns about the government’s economic policies.
Prime Minister Keir Starmer has argued that the previous government’s mismanagement is responsible for the current economic situation and the subsequent loss of high-net-worth individuals. However, critics have pointed out that the Labour government’s own policies, such as the proposed cuts to utility subsidies, have also contributed to declining public support.
Tax Inflation
British Finance Minister Rachel Reeves has faced calls to abandon the Treasury’s tough stance on resident and non-resident foreigners, announcing that they will all be subject to inheritance tax on their worldwide assets.
Amid growing criticism of the UK Treasury’s campaign, Reeves said that the non-resident regime will be amended starting next April, explaining that the increase in taxes in her budget by £40 billion is necessary to fill the budget gap, boost growth, and alleviate pressure on workers.
The Non-Domiciled Regime in the UK
Many wealthy individuals in Britain have stated that they have now become targets of the government, which has driven them to leave the country before the budget announcement last November, taking their investments with them.
According to CNBC, the controversial non-domiciled regime in the UK can be summarized as follows:
It is a 200-year-old tax rule that allows individuals who live in the UK but are domiciled elsewhere to avoid paying tax on income and capital gains earned abroad for up to 15 years.
The new tax rules, set to come into effect in April 2025, will impose stricter regulations on non-domiciled individuals.
Those who have been UK residents for more than four years will be required to pay taxes on their worldwide income and capital gains. However, new arrivals to the UK will enjoy a four-year tax exemption on their foreign income.
Additionally, while all residents will be subject to inheritance tax on their global assets, current non-residents will have a three-year grace period before they are required to pay tax on funds remitted to the UK.
