Labour has been accused of trying to have it both ways as Rachel Reeves jets off to Davos to try to attract foreign investment while new figures show a millionaire leaves the country every 45 minutes.
The chancellor will travel to the World Economic Forum’s annual meeting in the Swiss ski resort this week hoping to attract overseas cash to the UK.
But shadow chancellor Mel Stride accused her of “trying to drum up investment whilst her own tax sprees have discouraged exactly that”.
The exodus of millionaires has been blamed on the party’s crackdown on non-doms, a form of tax status for well-off foreign nationals living in Britain, and tax hikes in the Budget.
The figures, compiled by the analytics firm New World Wealth, show that Britain lost a net 10,800 millionaires last year, a 157 per cent increase on 2023, including 78 centi-millionaires (worth at least £100m) and 12 billionaires.
Rachel de Souza, a tax partner at auditing company RSM UK, said the demand for relocation advice was being driven by those with non-dom status before October’s Budget and entrepreneurs afterwards.
It follows a difficult start to the year for Ms Reeves after market turmoil led to warnings she must either cut spending or hike taxes to meet her own fiscal rules.
Labour was also forced to hit back at Elon Musk after the billionaire and Donald Trump ally claimed “very few” businesses want to invest in the UK.
Mr Stride said that while Labour “say their number one priority is growth”, their policies were “driving away the very people who might deliver it”.
“And now Rachel Reeves is rushing off to Davos, trying to drum up investment whilst her own tax sprees have discouraged exactly that.
“The chancellor will discover that wealth creators matter and that without them growth is stifled, funding for public services evaporates and working people pay the price through higher taxes, lower employment, lower wages and higher interest rates.”
Former business secretary Jacob Rees-Mogg said: “Reeves has made the UK a hostile environment for foreign investors which will not be improved by sipping cocktails in Davos. As the multimillionaires flee her socialist clutches she ought to change policy entirely and reinstate non-dom status.”
In her Budget, Ms Reeves confirmed the government would abolish the non-dom status from April, replacing it with a residence-based regime.
On Sunday, Treasury minister Darren Jones defended the changes in the face of the new figures on lost millionaires.
“It starts with the pretty fair principle that if you want to live in the UK, you should expect to pay your taxes in the UK like everyone else,” he told GB News.
Non-dom status, which is lawful, can save an individual from paying UK tax on dividends from foreign investments, rental payments on property overseas, or bank interest.
It was thrust into the spotlight when The Independent first revealed that Akshata Murty, Rishi Sunak’s wife, had used it to save potentially millions of pounds.
Ms Murty, whose family business is estimated to be worth around £60bn, later said she would no longer claim the status on her worldwide earnings.
At the time, she said she did not want her tax status to be a “distraction for my husband or to affect my family”.
Business leaders have also hit out at Ms Reeves’s Budget, warning it would hurt economic growth.
Lord Bilimoria, the co-founder of Cobra Beer, has said the planned hike in national insurance paid by employers will “damage business”.
But Ms Reeves has defended the changes, telling the CBI conference in November: “I have heard a lot of feedback about my Budget but not any alternative suggestions” on how to close what Labour says was a £22bn black hole in the public finances left by the last Tory government.
A Treasury spokesperson said: “Growing the economy is the number one mission of this government’s Plan for Change, so we can put more money in people’s pockets. The chancellor wants the CEOs and global investors at Davos – representing some of the biggest global companies – to know that the UK is on the up.
“Replacing the outdated non-dom tax regime with a new internationally competitive residence-based system addresses unfairness in our tax system, attracts the best talent and investment to the UK, and ensures everyone who is a long-term resident in the UK pays their taxes here.”
