What Labour’s Tax Plans Mean for Investment Migration

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Opinion polls suggest that Labour leader Keir Starmer will replace the Tories’ Rishi Sunak as the UK’s Prime Minister following the next general election. Although the date could be as late as January 28, 2025, most political pundits predict voters marking a cross on ballot papers in the second half of 2024. But how will Labour tax plans impact the world of investment migration?

This article will consider how proposed Labour tax plans affect the UK voter. Although the majority of the British press remains right-wing and pro-Tory, there’s more nuance than in 1992. Then The Sun, the best-selling tabloid, urged readers to vote for John Major’s Tories rather than for Neil Kinnock and Labour.

Their front-page headline on polling day, Thursday, April 9, 1992 introduces a scare story about Labour raising taxes. It reads: “If Kinnock wins today will the last person to leave Britain please turn out the lights”. The Labour leader’s face is PhotoShopped inside a lightbulb.

Revealing Labour Tax Plans

Before discussing the effect of Labour’s tax plans on Residency and Citizenship by Investment, let’s establish what a Labour Government will do regarding taxation. Do bear in mind, however, that this is supposition rather than fact. Labour have yet to publish their manifesto, set to come out on February 8, 2024.

In summary, based on official Party communications, Labour’s tax plans should focus on the following:

1. Terminating tax breaks for private equity bosses
2. Abolishing the non-dom tax loophole
3. Curtailing the tax breaks currently available to private schools

Using emotive language, Labour explains that these tax plans will raise much-needed funds for green investment, the National Health Service (NHS), and state schools. Traditionally, Labour, the founder of the Welfare State, has raised taxes to support initiatives that benefit all sectors of society.

More recently, this has been evidenced by a pledge to launch free breakfast clubs in every primary school in the UK to address truancy.

The UK Election and Investment Migration

The UK election, unlike the US election, does not resemble a battle of the ongoing culture wars. If the Tories pull off a surprise victory, Labour voters appear less inclined to leave the UK than Democrats deserting the US due to a Trump win. The most likely emigrants are Tory voters unhappy with the loss of tax privileges following a Labour triumph.

The Mayfair Tax loophole refers to the treating of carried interest earned by private equity managers as capital gains rather than as income. So, they’re taxed between 10% and 28% instead of up to 45%.

Abolishing this loophole will probably not lead to a mass exodus of private equity bosses. They don’t always sizeably invest in companies that they have shares in, meaning they treat this a bonus rather a risk of their capital.

A non-dom is a UK tax resident whose permanent home is abroad. By paying a government charge starting at £30,000, they become exempt from paying UK tax on capital gains and income earned overseas.

Non-doms, however, can’t vote in UK elections, but their change of status might affect the investment migration plans of their partner or spouse such as Rishi Sunak who is married to non-dom, Akshata Murty.

Labour consistently champions state schools as the great leveller, with a free education improving one’s employment options and future financial security. They argue that private schools foster inequality, with past attendees over-represented in finance and government. The end of tax breaks will drive up prices, causing Tory supporters to look for a cheaper option abroad.

Viewing the Post-Election Future With Latitude

Our UK Branch Manager Dom Barnes comments on what a change in government would mean: “It’s a little reductive to view Labour as the high-taxing Party and the Tories as the pro-business one, when taxation is currently at its highest in 70 years.”

“However, considering Labour’s proposals to abolish certain breaks and loopholes, a Labour win will lead to HNWIs and UHNWIs leaving the UK,” Barnes continues. “We witnessed a spike in enquiries towards the end of 2023 from this client base and the desire for advice continues today.” 

“An increasing number of our clients are tax migrants,” reveals Barnes. “As our Executive Chairman Eric Major recently illustrated, you can become a Caribbean tax resident and reduce your tax liability to 0%. So, we can recommend investment migration as a tool to protect your assets.” 

How We Can Help

It’s better to have a plan and not need it than not have a plan and need it, as Eric Major says. We can assist you with formulating one. So, don’t delay and contact Latitude Group today.