Last week’s budget could prompt a growing number of successful, working-age Britons to consider a move overseas, affirms the chief executive of one of the world’s largest independent financial advisory organisations.
The comments from Nigel Green, the founder and CEO of deVere Group, which has more than 80,000 mainly expatriate clients worldwide, come after Chancellor George Osborne confirmed on Wednesday that the higher rate of tax threshold is to increase for the first time next month, and that it will steadily increase in years to come.
Nigel Green’s observations are supported by the results of a recent deVere survey carried out last month that concluded 72 per cent of middle to top earners in the UK have ‘seriously considered’, ‘are thinking about’, or ‘would be tempted’ by a move overseas. Personal taxation was cited as the primary motivation for quitting Britain for 65 per cent of those polled.
Mr Green says: “The decision announced in the Budget to raise the threshold will drag yet more hard-working British people into the higher rate tax band. There’s already been an extra 1.4 million UK taxpayers pulled into this band over the last three years, with around 4 million paying this rate today. HMRC believes that the government’s plans will see the number that number reach 5.3 million by 2016.
“As such, the so-called ‘higher’ band increasingly looks more like a ‘regular’ band in the UK; it can no longer conceivably be seen exclusively as the tax bracket of ‘the rich’.
“The one per cent announced in last week’s Budget may not be a huge increase but it is likely to be received as another blow by middle and top earners, and it will certainly further compound the sentiment for many that they are increasingly ‘soaked’ by taxes.
“Many will also, rightly, assume that this is a trend that will surely only gain momentum in coming years. Higher taxes are almost inevitable due to the country’s changing demographics, namely an ageing population. This is because fewer workers supporting pensioners means that each worker will have to pay a higher proportion of their salary in tax.
“I suspect that this could all trigger more of Britain’s top achievers to consider a move abroad to safeguard and maximise their money in order to give themselves and their families the best lifestyle opportunities.
“History has taught us that if higher earners perceive they are taxed too much, they will simply move elsewhere to lower tax jurisdictions because they have the resources to do so.”
He continues: “As our recent poll reveals, the UK’s higher earners already feel ‘soaked’ by taxes. Nearly three-quarters of those surveyed reported that they are tempted to quit Britain. As these people are of working age, ambitious and career-focussed, they would in our experience typically consider destinations such as Dubai, Abu Dhabi, Hong Kong, Tokyo, Shanghai and South Africa."
315 deVere clients were polled in February 2014.