Britain's Super-Rich Draw Up 'Escape Plans' as Wealth-Tax Fears Grip an Incoming Labour Government

Some of Britain's wealthiest individuals are quietly drawing up plans to leave the country, tax advisers say, amid mounting speculation that an incoming Labour government led by Andy Burnham could unleash a sweeping crackdown on the fortunes of the rich.

According to the Daily Telegraph, international tax specialists have reported a surge in enquiries from high-net-worth clients weighing relocation overseas, driven by fears that Burnham — expected to enter Downing Street next week — could appoint Ed Miliband as chancellor and pursue aggressive changes to the tax code ahead of his first Budget.

Among the measures reportedly under discussion is aligning Capital Gains Tax rates more closely with income tax. Under such a change, the levy paid when assets such as shares, businesses and second homes are sold could rise substantially, potentially close to the top rates paid on salaries. Advisers said speculation had also swirled around the more radical possibility of an "exit tax," a charge levied on wealthy individuals who move their money and tax residency out of Britain — a tool used in some other countries to discourage capital flight.

David Lesperance, an international tax adviser who specializes in guiding the ultra-wealthy, told the newspaper that his clients were increasingly anxious. "With the proclamations from both Andy Burnham and Ed Miliband, there will be a massive increase in CGT and possibly an exit tax as well," he said, adding that some clients had already begun putting contingency plans in place rather than wait to see the detail.

Miliband has emerged as one of the frontrunners for the Treasury after playing a central role in supporting Burnham's leadership campaign, and the two are regarded as close political allies. Any tilt toward wealth taxation would mark a significant shift in economic direction and set the tone for the new administration's relationship with business and finance.

The Conservatives have seized on the reports, warning that higher taxes would choke off investment, deter entrepreneurs and ultimately drive growth abroad, leaving ordinary taxpayers to fill the gap. They have branded the mooted measures a "hostile" raid on wealth creators.

Critics of the wealthy's threatened exodus argue that talk of mass flight is frequently overstated, noting that similar warnings have accompanied past tax changes without triggering the departures that were predicted. But with a change of government now imminent, the question of how hard to tax Britain's richest — and whether they will simply pack up and leave — is fast becoming one of the defining early battles of the Burnham era.