It is a tale almost as old as tax itself. The expectation of significant tax increases in the near future has brought with it reports of wealthy individuals planning to take action in response. A popular theme is that those who may be impacted are planning their departure to sunnier shores.
Some might reasonably contend that this type of story has become a bit of a cliché: not just a tale, but a tall one. It could be labelled as lazy commentary and disregarded as scaremongering, an empty threat. Indeed, many may point to past experience that a lot of noise is often made about the ‘rich’ looking to leave the UK whenever tax rises are mooted but it has hardly led to a stampede to the exit door in the past.
That view is supported by a couple of studies: one from LSE in relation to millionaire migration from the UK, and another looking at the same phenomenon in the US by the American Sociological Association. The conclusions of both papers are broadly similar, in that there may be some high-profile examples of wealthy individuals moving for tax purposes but for many, the social cost to them and their families is too high.
That will likely reflect the experience of many tax advisers as well. Emigration for tax purposes can require a big upheaval in people’s lives, potentially involving a significant change in lifestyle for the entire family for over five years due to the temporary non-residence rules.
If tax is the sole factor behind the decision, then it is not unheard of for people to give up fairly quickly and boomerang back to the UK. Whilst emigration may feature in conversations with clients, it may well feature quite low down the list, if not at the bottom, of options set out by many tax advisers. The tax burden may be lower than the UK’s in their client’s destination of choice but the grass may not be greener, indeed there may not be much grass at all.
All that said, there is certainly a sense of change in the air at the moment. In my experience, what was once a topic brushed over quickly for completeness is becoming a focus of conversation more and more with clients. It may just be a temporary bubble of interest in emigration and accentuated by the fact that many of those seeking advice at the moment may be driven by concerns of changes to CGT.
This is, of course, just an anecdotal observation and there will inevitably be confirmation bias from those advisers who work with shareholders in transactions and with non-doms. However, the barriers that might have once stopped an emigration discussion in its tracks do not appear as insurmountable as they once did.
More people, of varying age and generation, seem to be willing to uproot. This also does not feel like a new phenomenon, moreover a growing trend since the pandemic. Tax may be a catalyst for some, but it is certainly not the only factor.
The advent of remote working has made it easier for some to envisage a working life abroad. The economic and political strains of the last decade can also play a role in the decision making. Short-term factors such as a fairly tepid British summer and the inevitable national naval gazing that comes as a consequence of a general election probably haven’t helped either.
Even if the forthcoming Budget represents a lightning rod for a decision on emigration for some, sudden changes in some people’s behaviour in response to tax should come as no real surprise. Examples of that date back to Ancient Greece, with speeches and plays of the period suggesting some may have hidden their ships and dressed in poor clothing before court to avoid a tax bill.
The irony will not be lost on many that Greece has now become one of the most attractive tax destinations for wealthy Brits looking to retire overseas, with its own preferential tax regime for non-doms. There are rumours that the new UK government may loan the Elgin Marbles to Greece. It might find a tranche of its wealthier taxpayers have come along for the ride.
It is a tale almost as old as tax itself. The expectation of significant tax increases in the near future has brought with it reports of wealthy individuals planning to take action in response. A popular theme is that those who may be impacted are planning their departure to sunnier shores.
Some might reasonably contend that this type of story has become a bit of a cliché: not just a tale, but a tall one. It could be labelled as lazy commentary and disregarded as scaremongering, an empty threat. Indeed, many may point to past experience that a lot of noise is often made about the ‘rich’ looking to leave the UK whenever tax rises are mooted but it has hardly led to a stampede to the exit door in the past.
That view is supported by a couple of studies: one from LSE in relation to millionaire migration from the UK, and another looking at the same phenomenon in the US by the American Sociological Association. The conclusions of both papers are broadly similar, in that there may be some high-profile examples of wealthy individuals moving for tax purposes but for many, the social cost to them and their families is too high.
That will likely reflect the experience of many tax advisers as well. Emigration for tax purposes can require a big upheaval in people’s lives, potentially involving a significant change in lifestyle for the entire family for over five years due to the temporary non-residence rules.
If tax is the sole factor behind the decision, then it is not unheard of for people to give up fairly quickly and boomerang back to the UK. Whilst emigration may feature in conversations with clients, it may well feature quite low down the list, if not at the bottom, of options set out by many tax advisers. The tax burden may be lower than the UK’s in their client’s destination of choice but the grass may not be greener, indeed there may not be much grass at all.
All that said, there is certainly a sense of change in the air at the moment. In my experience, what was once a topic brushed over quickly for completeness is becoming a focus of conversation more and more with clients. It may just be a temporary bubble of interest in emigration and accentuated by the fact that many of those seeking advice at the moment may be driven by concerns of changes to CGT.
This is, of course, just an anecdotal observation and there will inevitably be confirmation bias from those advisers who work with shareholders in transactions and with non-doms. However, the barriers that might have once stopped an emigration discussion in its tracks do not appear as insurmountable as they once did.
More people, of varying age and generation, seem to be willing to uproot. This also does not feel like a new phenomenon, moreover a growing trend since the pandemic. Tax may be a catalyst for some, but it is certainly not the only factor.
The advent of remote working has made it easier for some to envisage a working life abroad. The economic and political strains of the last decade can also play a role in the decision making. Short-term factors such as a fairly tepid British summer and the inevitable national naval gazing that comes as a consequence of a general election probably haven’t helped either.
Even if the forthcoming Budget represents a lightning rod for a decision on emigration for some, sudden changes in some people’s behaviour in response to tax should come as no real surprise. Examples of that date back to Ancient Greece, with speeches and plays of the period suggesting some may have hidden their ships and dressed in poor clothing before court to avoid a tax bill.
The irony will not be lost on many that Greece has now become one of the most attractive tax destinations for wealthy Brits looking to retire overseas, with its own preferential tax regime for non-doms. There are rumours that the new UK government may loan the Elgin Marbles to Greece. It might find a tranche of its wealthier taxpayers have come along for the ride.
