Over the past year I have seen something I do not remember encountering earlier in my career. Several clients with long-established lives in the UK have not just discussed leaving — they have actually done it.
Illustration by Dan Murrell
These were not speculative conversations about tax structures or lifestyle arbitrage. They were practical discussions shortly before the move about where to relocate, when to sell businesses and how to organise affairs once they were no longer UK resident.
In most cases tax was a major driver, though rarely the only one. Sometimes there were political concerns, sometimes lifestyle reasons and sometimes family considerations. What struck me most was simply how often tax appeared in these conversations compared with a few years ago.
These were successful professionals and business owners whose families and companies had been rooted in the UK for decades, yet they had reached the conclusion that the next stage of their lives would take place elsewhere.
Part of the issue, I think, is that the UK tax system increasingly feels uneven in how it treats different forms of economic activity. Employment income carries a large share of the burden, and the true cost is often opaque to laypeople.
With employer NI rising to 15% from April 2025 and the threshold falling significantly, the cost of human capital continues to climb
Most people understandably focus on income tax because it is the most visible element. National Insurance attracts far less attention, and employer National Insurance, in my experience, almost none at all.
Yet once employee and employer contributions are combined, the effective tax cost attached to employing people becomes far higher than many realise. Even for someone paying basic rate income tax, the combined burden approaches roughly half the total employment cost once income tax and both layers of National Insurance are considered.
With employer National Insurance rising to 15% from April 2025 and the threshold falling significantly, the cost of human capital continues to climb.
Employment income is also constrained in ways that other forms of capital are not. It is tied to hours worked and tied to location. Employees earn their income where they live and work, which makes this form of taxation relatively dependable for governments.
Entrepreneurs and investors operate under a different set of incentives. Financial capital can move, and so can the people directing it.
I sometimes wonder whether policymakers underestimate how sensitive behaviour can be once incentives begin to shift
Most business owners are not constantly searching for a new jurisdiction, but they do have options in a way that salaried employees usually do not.
Over the past few years the taxation of entrepreneurial activity has tightened. Capital gains tax rates have increased and, while reliefs such as Business Asset Disposal Relief remain, recent changes have narrowed the gap between income tax and capital gains.
That narrowing raises important questions. The two forms of activity are quite different, and the increase in CGT rates on business sales is the example clients mention most often.
I sometimes wonder whether policymakers underestimate how sensitive behaviour can be once incentives begin to shift.
Economists often refer to the Laffer Curve — the idea that beyond a certain point higher tax rates can reduce overall revenue because people change their behaviour. We do not know precisely where that point sits, but successive governments appear to have pushed progressively further to the right of the ‘peak’.
In practice, the most damaging response is not complex tax avoidance. It is something much simpler.
Chancellor scraps ‘non-dom’ tax regime
Someone builds a successful business, sells it and decides that the next stage of their life will take place somewhere else.
When that happens the UK does not only lose the tax from the sale. It potentially loses decades of future investment, employment and economic activity.
Even where someone retires after selling a business, the country they move to receives the spending, consumption and VAT that might otherwise have remained here. Unlike avoidance, those decisions are often irreversible.
Alongside tax levels themselves, there is also the question of stability. The UK tax system has experienced frequent reform over the past two decades.
I have written previously about the repeated changes to pensions since the so-called ‘simplification’ of 2006, which have gradually eroded confidence in the long-term reliability of the system.
More recently, attention has turned to proposals to bring pension funds within inheritance tax from April 2027, which are currently under consultation.
Those with the ‘broadest shoulders’ cannot carry any burden if they are simply no longer present
Migration data suggests this may not be an isolated phenomenon. Provisional figures indicate that around 16,500 millionaires left the UK in 2025, taking an estimated $91.8bn of wealth with them.
Those with the ‘broadest shoulders’ cannot carry any burden if they are simply no longer present.
When clients who have built businesses, created jobs and paid significant tax in the UK decide their future lies elsewhere, the effects reach far beyond the Treasury’s balance sheet.
It weakens the domestic investment base. It removes future spending and economic activity. And it also affects advisory firms like ours.
We are a UK-focused planning business built around UK residents and UK regulation. When clients relocate permanently, we often have to step away from long-standing relationships.
None of this is advice we seek to give. But it is a reality we are encountering far more often than we did earlier in our careers.
Alistair Cunningham is financial planning director at Wingate Financial Planning