Does the government realise the rich aren’t leaving on a whim?

High-net worth individuals rarely make a decision to leave the UK on a whim, according to Yorke Eaton, a senior advisor. Recent reports suggest that ultra-high net worth individuals, collectively worth £121 billion, have either left or are distancing themselves from the UK due to factors like tax changes, uncertainty and the prospect of future bills.

Wealthy families contribute to the UK economy beyond taxes, through spending, investments and employing locals. To retain high-net worth individuals, the government needs to understand their concerns and reassure them of long-term benefits. In its submission to the Autumn Budget, TheCityUK emphasized the need for a tax roadmap and a simplified regime to boost growth and competitiveness.

The government might also review recent changes to inheritance tax relief for businesses, aiming to create a more targeted system that encourages genuine investment. The UK is currently the only major European country without a favorable regime to attract internationally mobile affluent people. However, schemes like those in Greece and Italy could help address this gap.

Whether a wealthy individual decides to move depends on various factors such as age, family dynamics and what they want for their children. For some, it's about their own residence in the near term, while for others, it's about ensuring their long-term legacy. There's no room for complacency, as children's schooling is traditionally a barrier to leaving the UK, but this is being mitigated by the opening of prestigious UK schools in favorable tax jurisdictions.

The challenge for the Treasury is to comprehend what drives these decisions and find ways to encourage wealth to remain in the UK. The existing data shows what has happened; future announcements and conversations will determine the next steps. Yorke Eaton is the head of private wealth at Addleshaw Goddard.