According to independent financial consulting firm Devere Group, an increasingly large number of British professionals and entrepreneurs are preparing to leave the UK to evade the “invisible tax bomb” of labor.
The warning is because new figures show that nearly 2 million workers will be dragged into higher tax rates by the end of the decade due to the continued freezing of income tax thresholds. But Devere said those predictions may be lacking – because many affected people are already planning their exit.
“There is a big assumption here – people will only accept that they are pushed into higher brackets without taking action,” said Devere CEO Nigel Green. “That’s not what we’re seeing. Instead, the appetite for foreign and legal restructuring finances has soared since Reeves’ first budget and momentum did not slow down.”
The Office of Budget Responsibility (OBR) estimates that fiscal drag (inflation wage growth has allowed more people to join the higher tax zone) will bring £8.9 billion to the Ministry of Finance. But Greene shows that predictions ignore one key factor: mobility.
“Relocation is no longer a super-rich preservation. Distant jobs, global recruitment and dual nationality have greatly reduced the barriers,” he said. “We are now seeing more middle-income professionals considering their options abroad, especially in higher cost areas like the Southeast.”
Client relocation consultations in the Southeast have risen 36% among the most popular destinations since January, according to internal DEVERE data. These jurisdictions provide favorable systems, including uniform tax options or exemptions for foreign income.
“A skilled Londoner is 50% higher than his annual income tax rate two years ago and now has an annual income tax of £2,700, a figure that is up nearly 25%,” Green said. “For families who have been compressed by mortgages and parenting expenses, it proves to be a turning point.”
Green believes the government is misjudging the resilience of its tax base. “The £8.9 billion figure depends on both the static population and the passive taxpayer. Neither of these assumptions hold true,” he said.
“People, entrepreneurs, capital – they will all move. Tax policies won’t work in a vacuum.”
Warnings are increasing political pressures in the case of using freezing thresholds as a way to increase income without raising the title tax rate. Labor continues the policy proposed by the Conservative Party, leading to allegations of invisible tax raids on working families.
“The government bets on bracket creep is a secret source of cash that may require rethinking mathematics,” Green added. “The real story not only has to pay more taxes, but will quietly leave before they do so. The £8.9 billion figure is already shrinking.”
