Dr Kush Kanodia’s Post

The Institute for Fiscal Studies has warned that the government needs to find £25bn in tax rises to fix public services and avoid austerity. To find this money, the chancellor should draw on the 10 progressive tax reforms identified by Tax Justice UK and Patriotic Millionaires UK, which could raise up to £60bn a year. There is plenty of money out there: the richest 10% of households own 57% of wealth in the UK. At the same time, some of the wealthiest pay very low effective tax rates.

'Twas the night before Spring #Budget day... and the Chancellor, Jeremy Hunt is expected to deliver the most significant reforms to the #nondom #tax regime in a generation. It looks like the concept of #domicile will be abolished, as is the remittance basis regime. So, what will this mean? - Moving to an 'Italian style' tax regime where you have a tax holiday for the first 10 years of tax residency. - Significantly increasing the annual fee to benefit from tax exemption on overseas income and capital gains to £100,000 or even £150,000. - The remittance basis is gone - you can bring what you want, when you want to the UK without further tax, and the days of bank account segregation are behind us. - Anyone born in the UK wouldn't be able to benefit from the regime. - Major question mark over the future of offshore trusts. A week ago, no one saw this coming. If such dramatic reforms are announced tomorrow, it would represent a significant simplification to the current non-dom regime, and put a major dent in The Labour Party's tax proposals. There would be huge appeal for overseas wealthy families, and the higher annual fee will be insignificant if someone can freely bring their overseas monies to the UK. Someone find me a match to light the fireworks for Spring Budget 2024! https://lnkd.in/en69EzQe

Wealth Tax ‘Could Cost the UK £100bn in 10 Years’ The potential introduction of a wealth tax in the UK is a hot topic, with recent analysis suggesting significant economic repercussions. A new paper from the Taxpayers’ Alliance (TPA) posits that such a tax could lead to a near £100bn reduction in GDP over the next decade. The proposed two per cent tax on individuals with a net wealth of £10m or more is predicted to decrease the UK's annual GDP growth by 0.4%, impacting wages by around £1,107. This study challenges the notion that a wealth tax could bolster public coffers. Instead, it warns of a possible exodus of the wealthy, which could reduce taxable wealth by £260bn. Currently, the top one per cent of earners already contribute approximately 30% of all income tax, highlighting the complexity of the tax landscape in the UK. The unique structure of the UK economy, heavily reliant on the services sector, makes it particularly susceptible to the ramifications of a wealth tax. Unlike economies driven by agriculture or manufacturing, UK businesses might find it easier to relocate in response to increased taxation. While the idea of a wealth tax has gained traction following years of asset value inflation due to low interest rates and quantitative easing, its implementation faces hurdles. The challenges of accurately assessing individual net wealth and the risk of 'capital flight'—where wealthy individuals leave the country—remain significant obstacles. The conversation continues as we balance the need for fiscal responsibility with the potential economic impacts. 

Wealth Tax ‘Could Cost the UK £100bn in 10 Years’ The potential introduction of a wealth tax in the UK is a hot topic, with recent analysis suggesting significant economic repercussions. A new paper from the Taxpayers’ Alliance (TPA) posits that such a tax could lead to a near £100bn reduction in GDP over the next decade. The proposed two per cent tax on individuals with a net wealth of £10m or more is predicted to decrease the UK's annual GDP growth by 0.4%, impacting wages by around £1,107. This study challenges the notion that a wealth tax could bolster public coffers. Instead, it warns of a possible exodus of the wealthy, which could reduce taxable wealth by £260bn. Currently, the top one per cent of earners already contribute approximately 30% of all income tax, highlighting the complexity of the tax landscape in the UK. The unique structure of the UK economy, heavily reliant on the services sector, makes it particularly susceptible to the ramifications of a wealth tax. Unlike economies driven by agriculture or manufacturing, UK businesses might find it easier to relocate in response to increased taxation. While the idea of a wealth tax has gained traction following years of asset value inflation due to low interest rates and quantitative easing, its implementation faces hurdles. The challenges of accurately assessing individual net wealth and the risk of 'capital flight'—where wealthy individuals leave the country—remain significant obstacles. The conversation continues as we balance the need for fiscal responsibility with the potential economic impacts. 

What a Surprise - People believe someone else should pay higher taxes! Recent reports linked to public opinion services saying that 'someone else' (i.e. broadly whoever they feel is wealthy), should pay more taxes - e.g. via a wealth tax - 'to fund the NHS or whatever other good cause' someone mentions, is hardly a surprise to anyone who deals with tax on a day-to-day basis. However, it does reinforce the fact that people often refuse to listen to experts, or learn from the examples of other countries who have tried similar ideas in the past. On the positive side, one can argue that wealth taxes have been shown to reduce financial inequality in a society (for example, as measured by the Gini Co-efficient). However, given that wealth taxes can also be associated with the mass departure of 'wealth' (and wealthy individuals) from a country, this is hardly a surprise and quite possibly a bad thing. After all, who wants to live in a country where 'everyone is equally poor' (though I accept I'm being slightly hyperbolic). So do the wealthy actually leave a country, if wealth taxes are introduced? The simple answer is yes. For example, there is strong evidence from France, to show that wealth taxes encouraged the wealthiest and end up costing the country economically. For example, by reducing GDP growth on an ongoing basis. In this regard, one just needs to look at their history with the likes of ISF and then the so-called 75% 'supertax'. However, one could as an alternative give the example of say Switzerland - which does have a wealth tax and remains a 'destination' for people / wealth. Having said that though, comparing Switzerland with most other European countries from a tax perspective is an 'apples to oranges' comparison in many regards. After all, Switzerland has much lower effective, overall tax rates in most cases than most other countries which have a wealth tax and so the overall 'tax burden' even with a wealth tax often remains much lower than compared to say what it would be in France or the UK. So what does this mean overall for the introduction of a wealth tax in the UK? Well, realistically, it is easy to imagine it being a real cost for UK Plc. Not only are we already losing a number of our wealthiest taxpayers because of the Government's changes to the non-domiciled regime - and a wealth tax would just reinforce that movement of wealth from the UK - but we also need to realize that the wealth taxes in France reduced (per estimates), the country's GDP growth by 0.2% per annum on an ongoing basis. As such, we could end up with the worst of all possible worlds - lower overall tax receipts, lower growth, worse public services and quite possibly a higher tax burden on 'regular taxpayers' in a vain attempt to recoup the lost receipts we would otherwise of had! #wealthtaxes #nondoms #blickrothenberg #UHNIs https://lnkd.in/e6NdHjA4

Wealth Tax ‘Could Cost the UK £100bn in 10 Years’ The potential introduction of a wealth tax in the UK is a hot topic, with recent analysis suggesting significant economic repercussions. A new paper from the Taxpayers’ Alliance (TPA) posits that such a tax could lead to a near £100bn reduction in GDP over the next decade. The proposed two per cent tax on individuals with a net wealth of £10m or more is predicted to decrease the UK's annual GDP growth by 0.4%, impacting wages by around £1,107. This study challenges the notion that a wealth tax could bolster public coffers. Instead, it warns of a possible exodus of the wealthy, which could reduce taxable wealth by £260bn. Currently, the top one per cent of earners already contribute approximately 30% of all income tax, highlighting the complexity of the tax landscape in the UK. The unique structure of the UK economy, heavily reliant on the services sector, makes it particularly susceptible to the ramifications of a wealth tax. Unlike economies driven by agriculture or manufacturing, UK businesses might find it easier to relocate in response to increased taxation. While the idea of a wealth tax has gained traction following years of asset value inflation due to low interest rates and quantitative easing, its implementation faces hurdles. The challenges of accurately assessing individual net wealth and the risk of 'capital flight'—where wealthy individuals leave the country—remain significant obstacles. The conversation continues as we balance the need for fiscal responsibility with the potential economic impacts. 

The UK Spring Budget 2024, likely the last major fiscal event before the upcoming general election, was delivered by Chancellor Jeremy Hunt. The focus was on tax cuts to lower the burden on individuals and stimulate economic growth. Key announcements included cuts to National Insurance, the introduction of a UK ISA, and the abolishment of the UK 'non-dom' tax system. The budget builds upon measures announced in the 2023 Autumn Statement, aiming to boost investment, create jobs, and reduce taxes. Highlights include: Cuts to National Insurance: Class 1 NICs reduced from 10% to 8%, benefiting employees and the self-employed. Introduction of UK ISA: A tax-free £5,000 UK ISA introduced to encourage investment in UK stocks without tax on income and gains. British Savings Bonds: NS&I launching British savings bonds in April 2024, offering a fixed interest rate for three years. Capital Gains Tax (CGT) on Residential Property: Higher rate of CGT for property disposals reduced from 28% to 24% from April 2024 to boost property sales. Abolition of Furnished Holiday Lettings Regime: From April 2025, furnished holiday lets will be treated the same as long-term lets for tax purposes. UK Non-Dom Tax Status Abolished: New regime for UK resident non-domiciled individuals from April 2025, offering a four-year tax holiday on foreign income or gains. Consultation on Crypto-Asset Reporting: Government launching consultation on crypto-asset reporting to improve tax transparency. Child Benefit Threshold Raised: High-income child benefit charge threshold raised to £60,000 from April 2024, with a consultation to extend the charge to a household basis by April 2026. Abolition of Multiple Dwellings Relief for Stamp Duty: Multiple Dwellings Relief for stamp duty land tax abolished from June 2024. www.daintreewm.com

Labour’s nightmare: 60 taxpayers in U.K. responsible for £3bn of tax collected. In another uncomfortable scenario for Rachel Reeves, we now learn that if those 60 individuals left the U.K. then that would completely derail Labour’s revenue raising plans. This underlines the point I’ve been making for ages - it’s not the number of wealthy taxpayers that leave (whether non dom or not) but the quality of those taxpayers that matters. If the “wrong” non doms leave, which in my estimate would only require about 7,000 departures (about 10% of non doms) then we could lose up to half the revenue from that cohort (presently £12.4bn). That’s £6bn down the drain. UBS estimates that up to half a million of the U.K.’s millionaires will leave by 2028, which is why the IFS is agitating for an exit tax. In my view this is wrong headed as it will simply prompt more people to leave by April 2025, which is the earliest such a tax could be introduced. Scaring taxpayers with stories about exit taxes, wealth taxes and the like simply makes the environment worse. Bland assertions from high tax advocates that the wealthy simply won’t leave are frankly deluded.

Customer concentration is a major factor in a company's value, along with the likelihood of customers recommending your business and products to potential new clients. What is your customer concentration, and do you rely on a small number of customers? Reducing the reliance on Customers, Suppliers and Key Man Employee risk makes your business more valuable. Can a country shift its reliance on these taxpayers? The tax system has to be straightforward, reducing credits and mechanisms that hand tax back, which is inefficient. For simplicity, taking a £ burning 50p in administration and handing 50p in benefits or credits may buy votes, but it doesn't help the country in the long term. It will not be a fix in the window before the UK budget; is this where ideology and rhetoric meet the reality? Is it better to look after the wealthy you have so they share the experience with their friends and invite them to come.

Rachel Reeves looks to keep ‘stealth tax’ freeze on thresholds  - Budget move on individual income could raise £7bn a year towards plugging £40bn fiscal shortfall Tax as a share of GDP is expected to rise to 37.1 per cent of GDP in 2028-29, it said, some four percentage points above the pre-pandemic level. Since fiscal drag does not involve changing headline rates, it has generally not provoked the public opposition generated by more explicit tax-raising measures. However, the freezes are also bringing more people into paying income tax. Two-thirds of the adult population is set to pay income tax in 2027-28, compared with 58 per cent before the freezes started, according to the Institute for Fiscal Studies. It added that the number of people paying higher or additional rates of income tax had more than doubled since 2010. Former Tory chancellor Jeremy Hunt said that voters would be aggrieved if Labour prolonged the freeze beyond 2028. https://lnkd.in/eEWeF2Mh