The survey which was conducted among a sample of the UK adult population – not just HNW individuals – adds to disquiet about how potential tax squeezes are encouraging people to consider leaving the UK.

A property tax firm has added its voice to those warning that expected rising taxes from the UK government will encourage people, and not just high net worth individuals, to go abroad.

A week ago, the Adam Smith Institute, a free market think tank, said the share of the population who are millionaires will fall by 20 per cent by 2028. 

Cornerstone Tax, which has conducted national research among 2,110 UK individuals, found that 21 per cent of those questioned said proposed tax increases from the Labour government was a key factor for moving abroad. 

The firm said that just under a third (32 per cent) of those questioned gave changes to tax as their main reason for leaving. A further 24 per cent specifically plan to move their tax residency abroad if reported tax hikes actually take place.

The budget, to be delivered by Chancellor Rachel Reeves on 30 October, is expected to introduce reforms affecting inheritance tax relief; impose higher taxes on capital gains along with adjustments to CGT exemptions; increase taxes on investment income; alter pensions tax relief and tax-free allowances; and modify Business Assets Disposal Relief. At the top end of the wealth scale, the government has also signalled that it is scrapping the resident non-domicile system and replacing it with a new, residency-based approach, although uncertainties exist on how existing non-doms’ inheritance tax liabilities will be affected. There is also speculation that Reeves, perhaps in a bid to avoid the damage of a millionaire exit, will impose an exit tax of some kind. (The previous Conservative government also said that the non-dom system was being axed and replaced.)

The Cornerstone Tax report reinforces concerns that the UK has reached the upper limits of how high taxes, as a share of GDP, can go before they reduce, rather than raise, more money. The argument, sometimes known as “supply-side” economics, says that there is an optimum tax level between zero and 100 per cent, and that many major countries’ tax codes are beyond the optimum point. At issue are arguments about fairness versus economic growth and efficiency. 

At a time of greater capital and human mobility, jurisdictions such as the United Arab Emirates, Portugal, Malta, Switzerland, Singapore and Italy are competing to attract affluent people with a variety of schemes, including so-called “golden visas,” and various types of programmes offering residence/citizenship in return for investment, or some kind of annual lump-sum fee.

The most popular destinations for relocation according to Cornerstone’s study are Spain; Australia; the US; Canada; Dubai; Portugal; France; Malta, and Cyprus, the report said. 

“With proposed increases to capital gains tax and inheritance tax, it's no surprise that 16 per cent of the population agree that this budget will be the deciding factor in their decision to leave the UK. The thought of rising taxes amidst a cost-of-living crisis is pushing people to reconsider their futures,” David Hannah, group chair of Cornerstone Tax, said. “These are not just fleeting thoughts – they are serious intentions for many Brits as they seek more favourable conditions elsewhere.”

(Editor's comment: Although these conversations can turn highly political, it would be remiss for this news service not to have a view about where public policy is heading, and why it matters. In the most mercenary sense, the wealth advisory industry in the UK has probably never been as busy. Judging by their LinkedIn feeds, emails and conversations at conferences, advisors are rushed off their feet with requests for guidance. On another level, however, it plainly isn't positive for the UK as a wealth management market to have surveys and comments such as those given above. Whatever the specific issues and perceived drawbacks of the UK tax code, the country has, for at least three decades, been a broadly favourable place for HNW individuals and their families, including those from overseas. Many of these people are businessmen and women who create products, services and jobs. If many of them leave, that shrinks the tax base, and means those on lower incomes have to pick up the tab.

There is now a large body of evidence suggesting that HNW individuals pay a relatively high share of the total tax burden and suggestions that they somehow hide all this money where it never gets used productively are a fantasy. There needs to be an honest discussion about framing tax policy so that it meets the need for fairness and economic commonsense (this may not be as hard as it seems, even in these fraught times.)

A recent conversation with Philip Marcovici, a lawyer with experience of cross-border tax, points a way forward. We have also spoken to lawyers such as James Quarmby of Stephenson Harwood and Christopher Groves of Withers to explain a way forward. Needless to say, we intend to keep a close eye on developments.)