Britain could forfeit billions of pounds in tax revenue and private investment if Prime Minister Andy Burnham presses ahead with plans for a major expansion of wealth taxation, intensifying concerns over the UK’s competitiveness as high-net-worth individuals weigh leaving the country.
Analysis by Reform UK last month suggested Labour’s planned tax increases could exceed £100 billion a year, up from roughly £66 billion, if additional measures are introduced to fund the Government’s spending commitments.
Burnham has declined to rule out a wealth tax, saying those with the broadest shoulders may have “to ask for a little more”, while also signalling plans to extend National Insurance to landlords’ rental income.
The prospect of further tax rises has unsettled wealth advisers and investors, with reports suggesting dozens of Britain’s wealthiest residents are already considering relocating their assets — and, in some cases, themselves — overseas.
For the Treasury, the debate reflects a familiar fiscal dilemma. Higher taxes may generate additional revenue in the short term, but if they accelerate the departure of internationally mobile taxpayers and discourage investment, the long-term tax base could ultimately shrink.
David Lesperance, of wealth management firm Lesperance Associates, told LBC: “Since it became apparent that Starmer was going to be shown the door and since the election of Burnham, probably I’ve had 15 to 20 calls (from clients).
“They’re worried about a pretty significant haircut if they remain in the UK… if there’s an exit tax or significant increases in capital gains.”
He added “if they’re gone, that’s going to have an asymmetric negative on annual tax revenues to be spent on the NHS and everything else”, along with “a significant loss of employment, corporate tax, property tax, VAT on, on all their inputs for their business”.
With public spending commitments expanding and economic growth remaining subdued, Burnham faces the delicate task of balancing revenue generation against maintaining Britain’s attractiveness as a destination for capital and entrepreneurship.
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