Britain’s millionaire population is set to drop by 20% over the next five years due to changes in the taxation of non-doms, according to a right-wing think-tank.
People classed as millionaires will drop from 4.55% of the population currently to 3.62% over the life of this parliament, the Adam Smith Institute predicts from data generated by UBS.
Germany, France and Italy are likely to be the beneficiaries with their share of ‘high net worths’ or HNWs all expected to grow.
An increasingly “hostile culture for wealth creators" will spark the exodus from the UK, said the think-tank.
A crackdown on non-doms was a key part of the Labour government’s manifesto though the Tories touted similar plans.
Concern is growing, however, that if the predicted number of departures proves accurate the policy will result in far less tax being collected than under the previous regime.
According to the Adam Smith Institute, the top 1% of earners paid 29% of all income tax last year.
Robert Brodrick, chairman of the law firm Payne Hicks Beach, said: “The Adam Smith Institute analysis reflects what we are seeing on the ground.
“We have a golden opportunity to replace the non-dom regime with a system like the one in Italy that charges an annual fixed amount to satisfy a person’s worldwide tax liabilities which encourages UHNWIs to base themselves and their businesses here.
“Instead we are driving them all away which is seriously damaging to the UK economy.”
In another report on Tuesday, the Centre for the Analysis of Taxation called for Chancellor Rachel Reeves to impose an “exit tax” on the rich fleeing the country.
Investors with assets worth £5 billion left the UK in the 12 months to April, said the report, with countries with no capital gains tax (CGT) the favoured destinations.
Andy Summers, director of the Centre and an associate professor at the London School of Economics said: “Charging CGT on people who leave the UK is not about punishing them for leaving. It’s simply saying: ‘you need to pay your bill on the way out'”, he said.
“Most of the UK’s international peers already do this, and there is no reason why the UK couldn’t as well”.