The introduction of a mansion tax would result in capital flight among the high earners who contributed over a quarter of the UK’s total income tax in the last financial year.
DeVere Group chief executive Nigel Green says the proposal could have “serious, unintended consequences for the UK economy” ahead of a House of Commons debate on a mansion tax next Tuesday.
Green says advisers at expatriate wealth management specialist deVere have noted a decidable increase in the number of enquiries from high net-worth individuals looking to relocate and shield their assets outside of the UK.
He says: “It would appear that even talk of a mansion tax, and all the political posturing that is going with it, is ringing alarm bells for these clients, so there’s no doubt in my mind that should it come into effect, the result will be capital flight – because these people have the resources available to them to simply ‘up sticks’ to a lower tax jurisdiction if the UK loses its attraction.
“It’s extremely alarming that any political party, especially in these tough economic times, would want to risk potentially losing a large proportion of that revenue, which amounts to around £41bn, for the sake of raising between £1.7 and £2bn for the Exchequer through a mansion tax.”
High net-worth individuals contributed 25.7 per cent of the UK’s total income tax in the last financial year, according to deVere.
Chancellor George Osborne ruled out the introduction of a mansion tax in the Autumn Statement, claiming it would be “expensive”, “intrusive” and difficult to recoup.
But the debate was reopened when Labour leader Ed Miliband voiced his support for such a tax in February while the Lib Dems are said to have recently considered a mansion “super tax”, designed to go even further.