In Britain’s wealthiest circles, there is a lot of talk about leaving a UK that has entered a spiral of decline.
With the new Labour government thought to be targeting the middle classes and the wealthy, there are concerns the leaders are not considering the economic implications. Giving up on Britain for good is one option finding favour among the billionaire class.
“A lot of people want to stay for the schooling, for their kids, for culture, and because their families and loved ones live in the UK. They like the lifestyle of London. We have the best of everything,” luxury property developer Nick Candy told The National. “But we also have a society in decline. Decline in the values we once cherished, decline crime-wise, decline wokeness-wise, decline cancel culture-wise, and decline in work ethic.
“We are becoming – no joke – the laughing stock of the world.”
Labour, which swept to power on a landslide in July, has warned that public finances face a "£22 billion black hole", hinting that taxes will have to rise in October to pay for it.
The wealthy, a traditional target for the left-wing party, will also have to contribute more, Keir Starmer has warned. That includes the UK's more than 70,000 non-domiciled individuals, British residents whose permanent home is outside the country.
"There is a budget coming in October and it’s going to be painful," Keir Starmer has said. "Those with the broadest shoulders should bear the heavier burden, and that’s why we’re cracking down."
Tax is the biggest revenue raiser for the UK. And the wealthy already shoulder the heaviest burden, with the top 1 per cent of income taxpayers contributing 29 per cent of all income tax, and the top 10 per cent, 60 per cent of all income tax.
The party has already ruled out raising income tax, national insurance or VAT, leaving capital gains tax – which is paid on profits of assets – and inheritance tax likely targets. The party will add VAT to private school fees, a decision which is expected to lead to higher school rolls in the state sector, from January, again, impacting a larger portion of higher taxpayers.
'It's not looking good'
A recent report by Oxford Economics found that 83 per cent of wealthy global elites are likely to leave the UK due to plans to revise the non-dom tax regime.
Only China is expected to lose more millionaires than the UK, according to research by Henley & Partners, a British firm which specialises in residence and citizenship by investment. The UAE is set to gain the most.
Changes to the system, which allows wealthy people to live in the UK and avoid paying tax on their overseas income, were announced in March, requiring them to pay tax on overseas income and gains after living in the UK for four years, instead of the current 15 years, starting from April 6.
Government plans to go even further have already been announced, subjecting assets held overseas to British inheritance tax if a non-dom has lived in the UK for more than 10 years. Inheritance tax is currently set at 40 per cent, but is expected to be subjected to threshold changes in next month’s budget.
“Inheritance tax is almost always the biggest issue,” said Mark Davies, a tax adviser to the super-wealthy. “It’s not looking very good for the country."
Charlie Mullins, the founder of Pimlico Plumbers, has already left the UK, blaming the new Labour government for his move to Spain, where he plans to apply for citizenship. He will also spend several months in the UAE.
"None of the cabinet have ever run a business," he told The National. "To put it bluntly, they’re clueless. And undoubtedly, this is what is making, whether it is millionaires, billionaires, business people, entrepreneurs, and even Joe public want to leave the country.
"I am very sad about leaving the UK. I never thought it would come to this," he told The National. "I thought grin and bear it and get on with it. I have to be honest, I have advised all of my family to leave the country. I would like to think they would be out of the UK in a few years’ time."
He said "loads" of wealthy people he knows have also left or are planning on also leaving. "I know billionaires that have gone. I know millionaires that have gone. And some of them have gone to Dubai."
Mr Mullins is house hunting on Dubai's Palm Jumeirah. He has just set up another company in the UK, We Fix, which is like Pimlico Plumbers "but better", he said. He has placed his interests in a family trust and will see how things go, with plans to bring it to Dubai "if the tax, penalties and the laws they’re bringing in for workers’ rights become too much".
Bassim Haidar, the founder of Dubai-based financial services firm Optasia and African telecoms venture Channel IT, and a former British non-dom, also left the UK earlier this year for Greece, which allows its beneficiaries to avoid local income tax on their wealth outside the nation for a €100,000 ($111,000) annual fee for as long as 15 years.
Other popular locations among non-doms include Italy, which operates similar flat-fee schemes.
While Mr Candy remains committed to the UK, he says the tax changes are making the decision very difficult. He suggests the government could take a more canny approach to higher taxation for those non-domiciled UK residents.
"If we were to charge £300,000 per non-dom – or even a higher amount – it could potentially generate £20 billion, significantly contributing to addressing the UK's financial shortfall," he said.
Many of those leaving are expected to move to the UAE, which the wealthy see as having the environment they seek.
“First, the UAE has the best infrastructure in the world,” said Mr Candy. "Secondly, when you arrive here, you’ll find that crime is non-existent. You can leave your front door or car open without any concerns, knowing that you and your family will be 100 per cent safe."
“Third of all the schooling, the education, the hospital facilities are world-class. And you have huge tax benefits. Dubai even has a dedicated team to assist new residents with relocating and settling into their new life."
The country actually wants people to succeed, he said. It is a can-do attitude, rather than “the opposite in the UK at the moment”, said Mr Candy.
Philippe Amarante, managing partner at Henley & Partners Middle East, told The National the UK does not make sense any more to non-doms, in particular, due to the impending tax changes.
“If you reverse the question and think about Dubai," he said. “Does private wealth really have economic impact? Yes it does. So isn’t it maybe wiser to provide pathways to retain these people? Maybe add conditions to those statuses.
“Do something, incubate, help the next generation of business leaders. Make it socially digestible across the board. But non-doms are not seen as wanted, I guess.”
When Mr Amarante first took over the Dubai office in 2019, most of his clients were from South-east Asia, the Middle East and Africa, and looking for ways to invest into the West. That has now changed.
Mr Amarante says there is a “constant growing shaking of heads” among those looking to get out of London or the British expats no longer tempted to return to their homeland.
Some are interested in obtaining a second citizenship, something which used to be a pursuit only among those with less powerful passports.
“They are sitting in our office and asking us what else is there? I don’t feel I have a solid plan B and I am concerned about geopolitical developments. I am worried about economic developments. I want an alternative option at hand,” said Mr Amarante. “Single citizenship is a bit like standing on one leg. It’s not really stable.”
The brand of countries like the UK with once pre-eminent passport power has been dented as their reputation around the world is not what it once was. “It is a little bit, I would say, shaken,” said Mr Amarante.
