UK’s Wealthiest Contribute Over $3.9 in Income Tax Amid Fears of Super-Rich Exodus

Sixty of the UK’s wealthiest individuals collectively paid more than $3.9 billion in income tax during the 2021/22 fiscal year, contributing a significant share of the nation’s tax revenue. Each of these high earners reported an income of approximately $65.4 million, though many likely earned far more and contributed through other forms of taxation as well. Their combined tax payments amounted to about two-thirds of the additional spending commitments outlined in Labour’s manifesto earlier this year.

Concerns have arisen that tax increases expected in this month’s Budget could drive some of the super-rich to leave the UK, potentially harming the country’s finances. UBS, a Swiss banking giant, predicted in July that the UK could lose as many as half a million millionaires by 2028, partly due to a shift to low-tax jurisdictions.

The Institute for Fiscal Studies (IFS) cautioned that even a small number of departures from this wealthy group could create a significant shortfall in the UK’s tax revenues. The Treasury has reportedly expressed concerns that one of the key sources of funds for Labour’s fiscal pledges—the scrapping of the non-dom scheme—might yield less revenue than anticipated. Initially expected to raise $1.3 billion, the scheme allows UK residents to be registered abroad for tax purposes.

Stuart Adam, a senior economist at the IFS, stated that while reports of wealthy individuals leaving the UK are currently anecdotal, the departure of even a few could have a sizable impact on public finances. He pointed out that tax contributions are highly concentrated among a small number of high earners, meaning that any exodus would disproportionately affect tax receipts. He suggested that Rachel Reeves, the Shadow Chancellor, must take these risks into account when considering future tax policies.

Adam also noted that tax changes speculated to target top earners could affect more than just income tax revenue. Wealthy individuals often contribute significantly through other taxes, such as capital gains.

The figures on income tax payments, compiled by HMRC and obtained through Freedom of Information requests, show that in 2021/22, the UK collected $294 billion in total income tax from 33 million taxpayers. The 60 people with incomes exceeding $65.4 million represented just 0.0002% of UK taxpayers but accounted for 1.4% of the total income tax collected.

HMRC initially resisted releasing the data, citing concerns that disclosing it could reveal the identities of the individuals involved. However, the information was eventually made public.

To discourage wealthy individuals from leaving the country, the IFS has proposed introducing an “exit tax.” Adam explained that in some countries if someone leaves, they are taxed on gains accrued while living there, even if the assets aren’t sold until later. Conversely, gains accumulated before moving to the UK could be exempt from taxation, even if the assets are sold while residing in the country.

Have you read?
Countries: Powerful Passports.
Countries: Richest.
Countries: Poorest.
Countries: Happiest.
Countries: Life Expectancy.