Higher UK taxes could tempt people to move abroad, it is claimed

by Ray Clancy on March 28, 2014

Higher taxes could encourage more British people to leave and seek a life as an expat abroad, according to one of the world’s largest independent financial advisory organisations.

Changes to the higher rate tax threshold could tempt not just high flyers but middle of the road tax payers to look for jobs in more flexible tax regimes such as in Dubai, Abu Dhabi, Hong Kong, Tokyo, Shanghai or South Africa, it is claimed.

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Personal taxation was cited as the primary motivation for quitting Britain for 65% of those polled

Chancellor George Osborne’s Budget last week indicated 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, the founder and chief executive officer of the deVere Group, which has more than 80,000 mainly expat clients worldwide, believes this could make people think twice about staying in the UK.

He pointed out that the results of a deVere survey carried out last month found that 72% 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% of those polled.

‘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 four million paying this rate today. HMRC believes that the government’s plans will see that number reach 5.3 million by 2016,’ said Green.

‘As such, the so-called higher band increasingly looks more like a regular band in the UK and it can no longer conceivably be seen exclusively as the tax bracket of the rich. The 1% 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,’ he explained.

‘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 pensioner’s means that each worker will have to pay a higher proportion of their salary in tax,’ he added.

He believes that this could 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. As our recent poll reveals, the UK’s higher earners already feel soaked by taxes,’ Green pointed out.

‘Nearly three quarters of those surveyed reported that they are tempted to quit Britain. As these people are of working age, ambitious and career-focused, they would in our experience typically consider destinations such as Dubai, Abu Dhabi, Hong Kong, Tokyo, Shanghai and South Africa,’ he added.

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