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The millionaire exodus numbers are dubious
The Forecast
After the low-tax non-domicile regime was abolished, inheritance tax was extended to worldwide assets, and taxes on investment income rose, New World Wealth projected that the UK would lose around 16,500 millionaires in 2025, taking an estimated $91.8 billion in investable wealth with them. The top 1% of income taxpayers pay 28% of all income tax, and founders, serial entrepreneurs, and investors drive business creation, capital deployment, and jobs well beyond what they pay.
The Criticism
The figures have faced serious criticism for a weak methodology and for the financial interest of the organization behind them, which profits from assisting wealthy families to migrate. Academic evidence also finds that high earners are less responsive to tax changes than headlines suggest.
London's Record
London's record points the other way. It has the fourth largest tech ecosystem in the world, its lead has grown in recent years despite the tax changes, and 54 of the UK's 100 fastest growing companies have foreign-born founders. Venture capital and other sources of investment remain plentiful.
Why do top earners pay so much income tax?
Income tax rates rise with income, and income itself is heavily concentrated at the top. A small group therefore accounts for a large share of the tax base. HMRC publishes this each year in its statistics on income tax liabilities, broken down by percentile. The pattern appears in most countries with progressive tax systems, and income from capital gains and dividends is usually even more concentrated than wages.
Why do most high earners stay put when taxes rise?
Moving costs a lot more than a tax bill suggests, because it means leaving family, schools, professional networks, and a language or legal system a person knows. Researchers who study this find that most people respond to tax changes by adjusting how they earn or report income rather than by relocating. One well-known exception is a 2013 study by Henrik Kleven, Camille Landais, and Emmanuel Saez of European football. They found that foreign star players responded strongly to top tax rates when choosing which country to play in.
Why do tech hubs attract so many foreign founders?
Startups cluster in cities because investors, engineers, and customers are concentrated in the same place, which economists call agglomeration. Founders from abroad often arrive through universities or skilled-worker visas and stay because the hub offers talent and capital they cannot find at home. A 2022 report by the National Foundation for American Policy found that immigrants founded or co-founded more than half of the billion-dollar startups in the United States. Silicon Valley, London, and Berlin all draw a large share of their founders from outside the country.
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