Britain could suffer the largest exodus of millionaires in the world amid Government plans to crack down on non-doms.
The UK Government has announced plans to change the tax system for non-domiciled individuals which currently means they are not liable to pay UK tax on their foreign income and gains.
An analysis conducted by think tank the Adam Smith Institute estimated that the share of the population who are millionaires could plunge by 20 per cent over the course of the Parliament, raising concerns that the move may not raise extra income.
The research found that the share of millionaires could drop from 4.55 per cent now to 3.62 per cent over five years - in contrast to other major economies such as Germany and France, where the proportion is expected to grow.
Factors including high taxes, changes to the non-dom rules and “a hostile culture for wealth creators”, could help drive away non-doms, said the research.
It said this would be a blow to the Treasury as the very rich, the top one per cent of earners pay 29 per cent of all income tax.
The Office for Budget Responsibility (OBR) initially estimated that ending the tax break for high-income immigrants could generate approximately £3.2 billion annually.
However, this estimate was "highly uncertain" because affluent people might choose to leave the country or find other ways to evade the restrictions.
Labour has estimated that implementing its plans would generate an initial £1 billion in the first year. This would pay for extra medical and dental visits — and universal breakfast clubs in schools.
But it comes amid rumours that Chancellor Rachel Reeves could consider changing the plans around the crackdown if it does not bring in more revenue ahead of the Budget on October 30.
But a Treasury spokesperson last month called the reports “speculation, not Government policy” and pledged to remove “the outdated non-dom tax regime”.
A HM Treasury spokesperson said: “We are addressing unfairness in the tax system so we can raise the revenue to rebuild our public services.
“That is why we are removing the outdated non-dom tax regime and replacing it with a new internationally competitive residence-based regime focused on attracting the best talent and investment to the UK.”
