The UK’s 60 wealthiest individuals collectively paid more than £3 billion in income tax in the 2021/22 fiscal year, according to data obtained by the BBC through Freedom of Information requests. These individuals, each earning at least £50 million annually, contributed to 1.4% of the country’s total income tax receipts, despite representing just 0.0002% of taxpayers.
This figure equates to nearly two-thirds of the additional spending commitments proposed in Labour’s most recent manifesto. However, there is growing concern that upcoming tax increases could prompt the super-rich to leave the UK, potentially creating a significant gap in the country’s finances. UBS has predicted that by 2028, the UK may lose half a million millionaires, partly due to tax-driven migration to low-tax countries.
Stuart Adam, senior economist at the Institute for Fiscal Studies (IFS), warned that even a small exodus of wealthy individuals could lead to a “big hole” in the UK’s revenue, as tax payments are concentrated among the wealthiest. To prevent this, the IFS has suggested introducing an “exit tax” to ensure the UK can still claim taxes on gains accrued while individuals resided in the country.
Chancellor Rachel Reeves is faced with the challenge of raising £20 billion in the forthcoming Budget, which may include potential increases in capital gains tax. However, Labour has ruled out any income tax hikes.
The Green Party, on the other hand, downplayed the threat of wealthy individuals leaving the UK, arguing that non-dom status changes in 2017 did not trigger a mass exodus, and other factors like work, family, and culture play a role in the decision to stay.
The data release follows controversy surrounding the non-dom tax regime, which allows UK residents to register abroad for tax purposes. The government has pledged to replace the regime with a residence-based system designed to attract top talent and investment.