Britain’s wealthiest entrepreneurs are reportedly preparing contingency plans to leave the UK amid fears an incoming Andy Burnham government could unleash a sweeping tax crackdown if Ed Miliband is appointed Chancellor.
The prospect of the current Net Zero Secretary taking charge of the Treasury has sparked growing concern in business circles, with international tax advisers reporting a surge in enquiries from wealthy clients looking at relocating overseas before any changes are announced.
According to the Daily Telegraph, some of Britain’s richest individuals are already putting “escape plans” in place amid speculation that a Burnham administration could review Capital Gains Tax (CGT) ahead of its first Budget.
Mr Burnham has previously argued that Britain has “overtaxed jobs and undertaxed wealth”, comments widely interpreted as signalling support for higher taxes on investment gains rather than earnings.
Having repeatedly pledged to honour Labour’s manifesto commitment not to raise income tax, VAT or National Insurance, the incoming Prime Minister is expected to explore other ways of increasing Treasury revenues.
Among the options reportedly being discussed are aligning Capital Gains Tax rates more closely with income tax, while speculation has also surrounded the possibility of introducing an exit tax on wealthy individuals leaving Britain.
Those reports have heightened anxiety among investors and entrepreneurs.
David Lesperance, an international tax adviser who specialises in advising high-net-worth individuals, told the newspaper that clients were increasingly worried.
“My clients are concerned that, with the proclamations from both Andy Burnham and Ed Miliband, there will be a massive increase in CGT and possibly an exit tax as well.
“These people were concerned about Labour at the last election, and they have still got their escape plan set up. Now I’m getting more people setting up escape plans.”
Mr Miliband has emerged as one of the leading contenders to become Chancellor after playing a key role in supporting Mr Burnham’s leadership campaign.
The pair are regarded as close political allies, with Mr Miliband seconding one of his advisers to assist the Makerfield campaign.
However, reports suggest some City figures would prefer a more market-friendly appointment, with names including Shabana Mahmood and Wes Streeting also linked to the Treasury role.
Critics argue that raising Capital Gains Tax too sharply could discourage investment and encourage wealthy individuals to relocate, ultimately reducing tax revenues rather than increasing them.
Indeed, proposals to equalise Capital Gains Tax with income tax have previously been examined by the Treasury but rejected amid concerns they could raise less money than the existing system.
Mr Burnham has insisted no decision has yet been made on who will become Chancellor, with Cabinet appointments expected in the coming days.
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