Rich Britons would flee Labour tax raids, report finds

LABOUR’S tax raids would cost Britain more than £350million a year because the wealthy would flee the country, a Treasury analysis shows. Official research seen by The Daily

Telegraph suggests Sir Keir Starmer’s plan to raise taxes on investment funds and non-doms would drive investors out of Britain and reduce revenue.

Rachel Reeves, the shadow Chancellor of the Exchequer, set out her “business model for Britain” yesterday with attacks on globalisation and “trickle down” economics in a speech to a Washington think tank.

Ms Reeves’s speech and an accompanying 11,000 word pamphlet contained few references to personal taxes.

However, a 2018 paper written by Ms Reeves, then chairman of the Commons business select committee, shows she once called for new taxes including levies on property, land and gifts.

She also called for an increase in capital gains tax, a policy the shadow Chancellor insists she has “no plans” to enact.

Ms Reeves yesterday called for a “green special relationship” between Britain and the United States and pledged to mimic Joe Biden’s Inflation Reduction Act with investment in the UK’S clean energy sector.

Labour has pledged a series of taxes on investment funds, private schools, landlords and oil and gas companies if it wins the next election, plus billions more in public borrowing to fund green investment. The party claims it would raise £3.5billion in extra revenue from scrapping non-dom status and increasing taxes on private equity bosses that would be used to train more NHS staff.

But Treasury analysis of both policies finds they would lead to Britons fleeing the UK to avoid the taxes, leaving the Government with a black hole of more than £350 million a year after five years.

On Labour’s plans to increase “carried interest” payments by private equity funds by 12 percentage points, officials said: “Initial analysis conducted in 2020 indicated that this could have a net cost to the Exchequer, growing to around £350 million per annum after five years. This reflects the prevailing economic conditions and an assessment of the behavioural response of relevant taxpayers at the time [it] was made.”

The Telegraph understands officials also dispute Labour’s claim that few non-doms would emigrate if their preferential tax status was abolished because of other ties to the UK.

A Labour spokesman said Ms Reeves had “made it clear that all of Labour’s policies will be fully funded”.