Income Tax Hikes in the UK continue to Drive Brits Abroad.
According to the Royal Bank of Scotland’s Wealth Management team, larger numbers of British citizens are looking to leave their home country as a direct result of increases in taxes. In April 2009, the UK Government announced a new upper tax limit of 50% for all earnings in excess of £150,000. The tax measures, which were implemented with the intention of reinvigorating Britain’s ailing economy, were met with a large amount of criticism from Britain’s residents and it now appears that many high net worth individuals are not prepared to take it lying down.
Reports issued by RBS this week reveal that there has been a marked increase in the amount of people who are enquiring about Qualifying Recognized Overseas Pensions Schemes (QROPS) since the tax announcement was made in the last budget. QROPS allow UK pensions to be transferred into a pension scheme abroad and thus removes them from UK legislation. QROPS members can gain greater relief on their taxable earnings and can also, in some circumstances, avoid paying inheritance taxation. Louise Somerset, Tax Director at the Royal Bank of Scotland, described how many of Britain’s high earners “are increasingly keen to discuss the possibility of becoming non-UK resident, and taking their wealth and skills overseas in the process”.
The new taxes now make the United Kingdom one of highest tax paying nations in the world. From April 2011 there will be an effective rate on UK income tax of 51.5% but experts now claim that such measures will ultimately backfire as the nation’s elite take their money elsewhere. The findings from the Royal Bank of Scotland support earlier claims made in the Sunday Times, a leading British newspaper, that Britain’s top earners were actively looking to relocate their wealth elsewhere.
Many business owners recognize the potential to relocate their business and are prepared to do so if it means improving profits and minimizing their tax bills. Recent reports from popular newspapers indicate that some of the country’s top entrepreneurs such as Hugh Osmond, Peter Hargreaves, Robert Pfeifer and Philip Lambert have all indicated that they can, and will, take their businesses overseas in order to avoid hefty tax bills. Monaco, Switzerland, Jersey and the Isle of Man are all feasible low tax jurisdictions for Britain’s wealthiest individuals, and, as The Times reports, “Businessmen warned that raising taxes on the rich would do nothing to boost the Exchequer, as the wealthy can always find ways to avoid it”.