UK taxes pushing entrepreneurs to Monaco and Dubai

UK tax policy is driving entrepreneurs and wealthy investors to relocate to Monaco and Dubai, City leaders have warned in a report on the future of London as a financial centre.

The report, published by law firm Addleshaw Goddard, drew on interviews with 26 senior leaders from organisations including the City of London Corporation, UK Finance, J.P. Morgan and three of the UK’s top five retail banks.

“We need policies that encourage entrepreneurs. Now we have policies that say please go and grow your business in Monaco or Dubai or somewhere else. We shoot ourselves in the foot,” one contributor said.

The report identified the relocation of high-net-worth individuals as a core weakness for the City, stating it was reducing capital and influence in London.

It also flagged high relative taxation, cost of living and affordability issues keeping talent away, and warned that non-dom taxation and inheritance tax rules potentially weaken the financial services industry’s ability to attract skilled people and high-net-worth investors.

One interviewee said the UK’s fiscal and macroeconomic challenges had fed through to the reduced attractiveness of London, pointing to the non-dom tax policy and whether very wealthy individuals want to come to London and set up businesses.

Contributors warned the effects would compound over time. “Nothing lasts forever, particularly when you discourage it on a policy basis and make it difficult for people and companies,” one said.

The report set out potential consequences if policy does not change, including capital pools shallowing, funding migrating to the EU or US, and UK companies being forced to choose between markets.

It called for a reset of the immigration debate and fiscal incentives to attract and retain innovators, entrepreneurs and wealth generators.

The warnings carry weight for UK households because the businesses and capital leaving the country fund jobs, investment and tax receipts. One contributor cited 13,000 businesses backed by private capital in the UK, supporting two and a half million jobs.

The report noted the contrast with the US, where entrepreneurs, job creators and wealth generators are lauded, and said the UK Government faces a huge challenge to change the cultural narrative around wealth generation.

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