Budget must retain taxpayers, not just raise revenue

The UK’s upcoming Budget presents an opportunity to address a pressing issue: the retention of taxpayers in a landscape where many wealthy individuals are contemplating leaving. Phineas Hirsch, Partner within the Private Client team at Payne Hicks Beach, emphasises the interconnected nature of raising revenue and maintaining a stable tax regime. He states that “the Budget should approach retaining taxpayers and raising revenue as part of the same task.” Hirsch points out that increasing numbers of affluent individuals are leaving the UK or thinking about it, which makes it vital for the government to create reasons for them to remain.

He believes that a competitive and predictable tax environment is crucial for encouraging these individuals to stay and contribute to the economy. The news that an increase in capital gains tax has reportedly been rejected is, as he notes, “encouraging, although we must await the Budget for confirmation.” Many clients are currently uncertain how potential changes, particularly around a charge on unrealised gains, might affect their financial planning. According to Hirsch, clarity in these areas would allow taxpayers to plan with confidence instead of feeling pressured to prepare for emigration.

Furthermore, the interaction of tax rules is paramount. Hirsch explains that “the reported position on CGT does not settle the separate question of the uplift on death.” Changes in the inheritance tax landscape could lead to double taxation on family assets, complicating what should be a straightforward process when selling assets to cover tax obligations.

The Budget has the potential to rectify these complexities and, as Hirsch puts it, “getting that balance right would give internationally mobile individuals and families more confidence to stay and invest.” This would not only encourage entrepreneurship but also support the long-term revenue needs of the country. Ultimately, addressing the UK’s ‘leaky bucket’ means focusing on retaining contributors whose financial support plays a vital role in the nation’s economy.