Rachel Reeves has been warned that a new tax would trigger a “flood” of investors from the UK. The Chancellor is set to unveil her latest Budget on November 26, which is thought to be set to include significant fiscal changes as she seeks to boosts the Treasury’s income. Ms Reeves needs to plug a hole in the public finances, which is estimated to be as large as £50billion. It has been reported that she could impose a 20% levy on wealthy Britons who wish to leave the country for places with lower taxes.
At the moment, emigrants can sell their British assets after moving abroad without being required to pay capital gains tax, usually charged at 20%. But the mooted policy would mean that asset holders would be required to pay up at the point of departure, albeit with an option to delay for several years if the individual were not to liquidate their holdings straight away.
It would bring the UK in line with other G7 countries.
Nevertheless, Conservative Party Chairman Kevin Hollinrake has issued a warning.
He said: “Rachel Reeves’ ‘settling up charge’ (exit tax) isn’t smart economics – it’s desperation.
“If you’re going to do this, do it when investors are confident, not when they’re already fleeing.
“This will turn the stream into a flood as investors get out before it takes effect.”
The change is predicted to raise about £2billion, The Times reports.
In June, a Henley Private Wealth Migration Report suggested that Britain was set to lose a record 16,500 millionaires in 2025, as rising taxes pushed the country’s wealthiest residents to leave.
This marked the largest annual outflow of high-net-worth individuals (HNWIs) in UK history.
Sir Keir Starmer declined to say earlier this week that he would stand by Labour’s manifesto pledge not to raise VAT, income tax or national insurance in next month’s Budget amid a grim economic backdrop.
The Prime Minister also refused to rule out extending the freeze on the personal tax allowance threshold, which drags more earners into paying income tax.
He suggested that the Tories “did even more damage to the economy than we previously thought”.
Sir Keir added: “We will turn that around. We’ve already delivered the fastest growth in the G7 in the first half of this year. Five interest rate cuts in a row, trade deals with the US, EU and India.
“They broke the economy. We’re fixing it.”
