Burnham’s “thinly spread” Budget was not harmless for Britain’s wealth creators, writes Jamie Morrison

Much has been made of the uneventful, quiet nature of this Budget. Some have described it as “thinly spread”, making “marginal tweaks” at the edges (or as the BBC’s Chris Mason put it: “a flotilla of small measures”), but there is one area where the government has had a big impact: driving wealth creators out of the UK and into the arms of others.

It is certainly true that some of the most damaging measures – mansion taxes, inheritance tax hikes or major tweaks to capital gains taxes – were left to one side. It could have been a lot worse, and many will be breathing a sigh of relief.

Penalties for the wealthy

But while the Chancellor may not have inflicted further cuts to the ties still keeping wealth creators in this country, that doesn’t mean the outlook has improved. Healey still chose to double down on taxing wealth – he just did it in a more muted way by opting for a two per cent increase on savings and property income, taking the rates to 24 per cent, 44 per cent and 49 per cent. Although there’s not been much fanfare around this shift, that’s a significant increase for those with sizeable property portfolios and savings in the UK: the high-net-worth individuals (HNWIs) of this country.

A two per cent increase could mean hundreds of thousands of pounds – if not more – for them. Beyond the immediate financial impact, it’s also an indication of the direction of travel for this government, and a narrative that tells any aspirant that the UK is not the place to be.

We’re already seeing that play out with the HMRC crackdowns also announced in the Budget, which place a particular focus on billionaires, 200 of whom will now be assigned dedicated “customer compliance managers” to learn more about their tax affairs. It’s yet another unwelcoming move, especially when you consider that according to HMRC’s own data from last year, the tax gap for the wealthy individual category was £3.6bn – far smaller than the £36.7bn tax gap sitting with the small business category.

It’s all money that should, of course, be recovered, but the government’s efforts seem mismatched. Last year, for example, HMRC allocated £300m for compliance activities that tackle the wealthy, and only £850m on activities that tackle the small business tax gap. Just twice the amount of money for compliance activities that were supposed to find over 10 times more money in tax.

Other countries are waiting with open arms

The fact is this government’s approach is pushing wealth creators, and all of the jobs and GDP they generate, away at the exact moment other countries are opening their arms. You only have to glance at the likes of Turkey, Italy, and the UAE to see how hard others are working to attract these individuals.

Milan has become a particular hotspot, with wealth creators drawn in by a flat tax rate of €300,000, regardless of how much income the individual actually generates. Dubai offers a zero-tax environment and long-term visa programmes to encourage HNWIs to its shores. And Turkey recently unveiled low inheritance tax plans, and the opportunity to free 20 years of overseas income and capital gains from local levies.

It doesn’t surprise me that many of my clients take one look at those offerings, compare them with what they are due to pay in the UK, as well as the general sentiment, and head for the door. Healey has done very little to encourage them to keep their money in the country, and when they read through the incentives on offer elsewhere, it’s a no-brainer.

The government has got to raise revenue from somewhere, I get that. But they are choosing to do so in a way that drives billions of pounds away from the country. Rather than pulling back from the brink, and encouraging wealthy individuals to stay, this Budget pushed them even further away.