You might not be a fan of Charlie Mullins, ‘Britain’s richest plumber’, but when the spikey-haired multi-millionaire says that he’s leaving Britain because the tax regime under Labour is going to take too much of his cash, we need to take notice.
Because Mullins is just one of thousands of millionaires who have either already left the country or are planning on doing so before the end of the year.. Labour’s ‘eat the rich’ plan of raiding UK investors’ assets in the Autumn Budget is what is frightening them away.
Citizenship consultants Henley & Partners estimates that a record 9,500 millionaires will leave Britain in 2024, up from 4,200 last year.
Now you might think: “Who cares about the rich – let them leave!” Anyone struggling on a small salary or the state pension is hardly going to care about the woes of the super-rich.
But actually we do need to care because as the rich leave the sinking ship, they’re taking their tax money with them and it will be the rest of us who will have to pick up the slack.
Contrary to popular belief, most rich people do actually pay tax. Admittedly they tend to have expensive accountants to help them pay as little as possible but, apart from those who are willing to live a few months of every year in different countries (I have two friends who do that) none of them can escape paying tax altogether.
In fact, the top one percent of earners in this country pay an impressive 30 percent of the country’s tax. Charlie Mullins himself claims he has paid over £120m in UK taxes. So that means that as the rich move to Dubai, Switzerland, Italy and other countries that now welcome rich foreigners with open, low tax arms, billions of their tax money goes with them.
And guess what: as the big spenders leave the country, the burden of taxation is going to land harder on those of us who are left. It will be the middle and lower earners who will have to pay more, even though we already lose a sizeable chunk of our earnings each year to HMRC, thanks to the last government freezing the tax thresholds.
In particular, though, it will be pensioners and those close to retirement who will be most in danger of paying higher taxes. This is because the assets they have amassed to live off (property, pensions, investments etc) will be sitting targets for Westminster’s raiders of the lost tax.
Labour has already hinted that Capital Gains Tax (CGT) will be increased, specifically targeting those with some investments put by.. Inheritance Tax (IHT) is also tipped to be increased to 50 per cent. Currently only around four per cent of estates fall into the IHT trap, but it is still an emotive tax and for many rich people, like Mullins, the idea of the state taking even more in death is the final straw.
No taxes are fair to all and no one enjoys paying them. But, for governments, the important thing is to create a tax regime that is bearable to the populace and that actually works.
Increasing taxes on the rich and on successful businesses may seem fair on paper, but, in practice, the policy tends to reduce government income instead of increasing it, because those who see how much they will have to pay either stop working or simply leave the country.
Trying to dump extra taxes on the rich will damage the country and dampen enthusiasm to do business and create wealth in the UK. I hope Rachel Reeves is re-thinking her policies.
