Labour’s so-called “stealth tax bombshell” might not deliver the £8.9bn windfall projected, as rising numbers of British professionals and entrepreneurs will be preparing to leave the country in search of lower-tax jurisdictions, according to deVere Group, one of the world’s largest independent financial advisory and asset management organisations.
Figures recently released by the Liberal Democrats claim that 1.9 million workers will be pulled into higher tax bands by the end of the decade, as frozen thresholds quietly deepen the real tax burden on the population.
But deVere warns the forecast fails to account for a sharp uptick in relocation enquiries from clients alarmed by the growing fiscal drag, which could ultimately see many leave the UK.
“There’s a major assumption at play here — that people will simply accept being pushed into higher brackets without taking action,” says Nigel Green, CEO of deVere Group.
“That’s not what we’re seeing. On the contrary, the appetite to move abroad and legally restructure finances has soared since Reeves’ first Budget and the momentum is not slowing.
“In terms of this new report, we think it can be expected that many, many people will not be waiting to be dragged into higher bands. Indeed, they’re already actively considering their options.”
Since the government opted to continue freezing income tax thresholds until at least 2028, middle- and higher-earning UK residents have “increasingly sought options in tax-friendly destinations such as Italy, Portugal, Switzerland, and Dubai.”
These jurisdictions offer either flat-rate regimes, significant exemptions on foreign income, or no personal income tax at all.
“A skilled Londoner earning 50% above the median salary now faces an extra £2,700 in annual income tax compared to just two years ago — a jump of nearly 25%. For a family already facing soaring mortgage and childcare costs, that isn’t sustainable. Many are rethinking their future.”
The Office for Budget Responsibility (OBR) has previously warned that fiscal drag — when rising earnings push people into higher tax brackets due to frozen thresholds — will become the single largest revenue raiser for the Treasury in the coming years.
“But that projection hinges on a static population and passive taxpayers. Neither assumption holds,” notes the deVere CEO.
“Relocation is no longer the preserve of the ultra-wealthy,” adds Green. “Remote work, dual citizenship, global hiring trends — they’ve all lowered the barriers.
“A growing segment of Britain’s economic engine is international in mindset, and if they’re not being rewarded at home, they’re increasingly comfortable exploring options abroad.”
The south-east of England, where workers are expected to bear £3bn of the stealth tax’s impact, is seeing particular interest in outbound strategies.
According to internal deVere data, client relocation consultations in the region have risen by 36% since the start of the year. The most common motivations are personal tax relief, better value for lifestyle costs, and long-term wealth preservation.
The government may yet find that its stealth tax strategy backfires, not just politically, but fiscally.
“It’s a mistake to believe tax policy exists in a vacuum,” says Nigel Green.
“People, entrepreneurs, talent, and capital adapt. If the rules in one jurisdiction change, many will look to play by the rules in another.”
As tax fatigue grows and relocation continues to gain momentum, deVere expects the trend to accelerate through 2025 and beyond.
Governments betting on bracket creep as a stealthy source of cash may need to rethink the maths.
The deVere CEO concluded, “This is the real story: not just how much more tax Brits will be forced to pay if they stay — but how many will quietly leave before they do. That £8.9bn figure? It’s already shrinking.”
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