‘No There Has Not Been an ‘Exodus’ of UK Millionaires and New Wealth Taxes Won’t Force Them to Leave Either’

A slew of media reports this week claimed that there has been an “exodus” of millionaires from the UK since Labour came to power, with investment migration advisers Henley & Partners citing the end of non-dom tax breaks as a key factor driving the departure of some 10,800 millionaires.

The numbers cited are questionable, given they are based upon a survey by a ‘global wealth intelligence’ firm. However, even if entirely accurate, it would still represent less than 0.5% of the more than three million millionaires who live in the UK. This amounts to a rounding error and is hardly the “exodus” claimed.

In reality, the UK is one of just three countries in the world, together with China and the United States, to host more than three million millionaires and despite the media claims, most of them are unlikely to be leaving any time soon.

As the former city trader Gary Stevenson has explained, the most common response he gets to his YouTube videos on economics and wealth inequality is that: ‘you can’t tax the rich – they’ll leave’.

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However, in his view high net worth individuals are “the least mobile people in the world, from a tax perspective”. They largely extract their wealth from immovable assets, such as commercial and private property, in contrast to ordinary workers, who genuinely can emigrate and sell their skills in an overseas labour market. This is why, according to Stevenson: “the richest people are technically the easiest to tax.” 

Carla Denyer, co-leader of the Green Party, told Byline Times these reports of an ‘exodus’ are simply fear-mongering, “by opponents of fair taxation”.

In its election manifesto last year the Green Party called for a wealth tax of one per cent on assets over £10m and two per cent on assets over £1bn. Denyer describes this as a “really quite modest” tax on wealth. She said: “In 2024, the combined wealth of UK billionaires increased by £35m per day. And the rest of us are feeling the impact of that inequality every day, in terms of our ability to pay the bills, and the services we need to access every day – the NHS, schools – because when you have extreme wealth inequality, a lot of that money is locked away, rather than circulating in the economy for the benefit of everyone.” 

Campaign group Patriotic Millionaires UK go even further, calling for a two per cent tax on assets over £10m to raise £24bn for public services, and an end to various tax breaks for the super-rich. A number of NGOs, including Tax Justice UK, support this call. 

The wealth tax movement is also gaining traction internationally. More than 370 millionaires and billionaires, including green industrialist Dale Vince, have called on world leaders at Davos to tax the super-rich, amid concerns that extreme wealth is a threat to global stability under the new Trump administration. The campaign highlights that billionaires worldwide pay on average just 0.3% tax on their wealth and assets. It calls for a tax of up to 5% on the wealthiest 1%, and argues this could raise $1.7 trillion a year: enough to lift two billion people out of poverty. 

However, not all advocates for progressive taxation support a wealth tax. Richard Murphy, Professor of Accounting at the University of Sheffield and co-founder of the Tax Justice Network, does not. He believes valuing assets and collecting wealth taxes would require extensive bureaucracy for HMRC in return for relatively low tax receipts.

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Instead, in his Taxing Wealth Report 2024, Murphy proposes a range of taxes on the income and expenditure of the wealthiest 10%, e.g. increasing capital gains tax so it matches income tax could raise £12bn in extra tax per year. Murphy calculates these changes could bring in an additional £90bn a year, which could be used to fund much-needed public sector investment. Murphy said: “We’ve already got all the data we need to tax wealthy people very easily, very efficiently, and at a low cost. So why create a wealth tax? It’s just gesture politics.” 

For the current Labour administration, however, calls for any form of new progressive taxation seems to fall on deaf ears. Chancellor Rachel Reeves has stood firm in her commitment to her self-imposed ‘fiscal rules’, and stressed her willingness to make “difficult decisions” in order to “make sure the sums add up”. Last week Reeves insisted she was happy to be known as the ‘Iron Chancellor’ in a nod to former Tory Prime Minister Margaret Thatcher. 

Murphy describes Reeves’ preoccupation with ‘balancing the books’ while simultaneously pursuing economic growth as “economically illiterate”. He says there is “not an iota of difference” between the Labour and former Conservative Governments’ approaches to the economy.

“Why does she think now that the private sector is suddenly going to jump in and generate lots of new jobs? There’s no confidence in the economy…high interest rates are pushing up mortgages and rents, which means people can’t make discretionary spending, which is needed for growth. Everything that she’s doing is designed to reduce growth in the economy, even though that’s what she says is her goal.” 

Murphy explains it’s a common misconception that the Government needs more tax revenue in order to invest in public services, whereas in fact the government can simply instruct the Bank of England to create the necessary additional currency (within reasonable limits to avoid runaway inflation).

Moreover, investment in public services creates a ‘multiplier effect’ which works to create new jobs, new disposable income and stimulates economic growth. Murphy calculates that investment in NHS services has a multiplier effect of 1:3 (£1 investment creates a return of £3 for the economy).

However, it seems unlikely that Rachel Reeves will heed this call. Instead the Chancellor seems more mindful of the media warnings about an “exodus” of millionaires, telling world leaders in Davos this week of her plans to ‘soften’ non-dom tax changes announced last year.