The Chancellor is thought to be planning to boost the Government’s tax intake.
Rachel Reeves has been warned that she is making a ‘mistake’ (Image: Getty)
Rachel Reeves will fall short of delivering a £8.9billion tax windfall as Brits will flee the country, an expert has warned. Rising numbers of professionals and entrepreneurs will be preparing to leave the UK in search of lower-tax jurisdictions, according to independent financial advisory and asset management firm the deVere Group. It has been claimed that 1.9million workers will be pulled into higher tax bands by the end of the decade due to income thresholds remaining frozen until 2028.
However, it is thought that this forecast from the Liberal Democrats does not account for a “sharp uptick” in relocation enquiries from deVere’s clients alarmed by the growing fiscal drag, which could ultimately see many move abroad. “There’s a major assumption at play here — that people will simply accept being pushed into higher brackets without taking action,” says Nigel Green, the group’s CEO. “That’s not what we’re seeing. On the contrary, the appetite to move abroad and legally restructure finances has soared since Reeves’ first Budget and the momentum is not slowing.
Nigel Green has blasted Ms Reeves’ strategy (Image: Getty)
“In terms of this new report, we think it can be expected that many, many people will not be waiting to be dragged into higher bands.
“Indeed, they’re already actively considering their options.”
Mr Green says that middle and higher-earning UK residents have increasingly sought options in “tax-friendly” destinations such as Italy, Portugal, Switzerland, and Dubai.
These jurisdictions “offer either flat-rate regimes, significant exemptions on foreign income, or no personal income tax at all”.
“Relocation is no longer the preserve of the ultra-wealthy,” Mr Green added. “Remote work, dual citizenship, global hiring trends — they’ve all lowered the barriers.
“A growing segment of Britain’s economic engine is international in mindset, and if they’re not being rewarded at home, they’re increasingly comfortable exploring options abroad.”
deVere’s data suggests that the south-east of England, where workers are expected to bear £3billion of what Lib Dems’ Daisy Cooper previously described as Ms Reeves’ “stealth tax”, is seeing particular interest in outbound strategies.
Client relocation consultations in the region have increased by 36% since the start of the year, with the most common motivations being “personal tax relief, better value for lifestyle costs, and long-term wealth preservation”.
Mr Green said: “It’s a mistake to believe tax policy exists in a vacuum,” says Nigel Green.
“People, entrepreneurs, talent, and capital adapt. If the rules in one jurisdiction change, many will look to play by the rules in another.”
The Government claims that it is tackling economic instability.
Chief secretary to the Treasury Darren Jones said earlier this month: “After years of economic instability crippling the public purse, we have taken the decisions to stabilise our public finances, which has helped deliver four interest rate cuts since August, cutting the cost of borrowing for businesses and working people.
“We’re fixing the NHS, with three million more appointments to bring waiting lists down, rebuilding Britain with our landmark planning reforms and strengthening our borders, delivering on the priorities of the country through our Plan for Change.”
