The United Kingdom is on the verge of losing a significant portion of its millionaire population over the next four years, according to new research. Experts are raising alarms as prominent academics and economic commentators urge the government to introduce an exit tax in the upcoming Budget, a move they believe could help retain wealthy individuals and prevent further financial drain.
A study from the Adam Smith Institute (ASI), a right-leaning think tank, forecasts a dramatic 20% decline in the number of UK millionaires by 2028. This sharp drop places the UK in an alarming position compared to 36 other countries, most of which expect their millionaire populations to rise. The Netherlands, the next biggest loser in the study, is projected to experience only a 5% decline, followed by Saudi Arabia.
Concerns Over Wealth Flight Intensify
The ASI’s Millionaire Tracker report adds to mounting concerns that the UK is becoming less attractive to wealthy residents, who play a crucial role in the country’s tax revenue. Wealthy individuals contribute a disproportionately large share to public finances, and their departure could have a significant impact on the UK’s economy.
Several prominent tax lawyers and wealth advisors have noted an uptick in enquiries from clients looking to leave the UK in recent months. Henley & Partners, a leading investment migration consultancy, predicted in June that the UK would lose the second highest number of millionaires in the world by the end of this year.
Nadhim Zahawi, a former Chancellor and patron of the ASI, expressed concern over the growing exodus, stating: “The rate at which millionaires are leaving the UK is a vote of no confidence in our current tax and regulatory regime. The government must act to prevent further damage in the upcoming Budget.”
Academics Join Calls for Exit Tax
As the debate intensifies, two top academics, Arun Advani of the University of Warwick and Andy Summers of the London School of Economics, have voiced support for introducing an exit tax to discourage the wealthy from leaving. Their new report, published by the Centre for the Analysis of Taxation (Cen Tax), suggests that the UK follow the example of countries like Australia and Canada by imposing capital gains tax (CGT) on individuals who emigrate.
The report revealed that three-quarters of wealthy individuals who leave the UK relocate to countries where they can sell their businesses without paying any tax on gains earned in the UK. This has created an incentive for millionaires and billionaires to leave the country before realizing capital gains, which the academics argue is leading to a significant loss of potential tax revenue.
The Institute for Fiscal Studies and the Resolution Foundation, two other influential think tanks, have also proposed similar exit tax measures. Their research found that the 10 wealthiest individuals who left the UK last year accounted for 73% of potential revenue from capital gains.
“An exit tax isn’t about punishing those who leave,” said Summers. “It’s about making sure they pay what they owe before they go. Many of our international peers already enforce this, and the UK should consider doing the same.”
Balancing Tax Policy and Wealth Retention
As pressure mounts on Chancellor Rachel Reeves to introduce new measures in the Autumn Budget, the idea of an exit tax is gaining traction. Proponents argue that such a tax would level the playing field and prevent further financial flight, while critics warn that it could discourage investment and worsen the business climate.
The upcoming Budget on October 30 could be pivotal in determining the future of the UK’s millionaire population, as the government grapples with how to balance retaining wealth within its borders while introducing fair and effective tax measures. The fate of the UK’s high net-worth individuals—and their contributions to the nation’s economy—hangs in the balance.
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