Discuss this article at First Drafts , Prospect’s editorial blog
Earlier this year, an IMF paper declared Britain to be a tax haven. The comment passed largely unnoticed at the time, but the recent attention that has been focused on private equity companies has moved the issue of the taxation of the “super-rich,” as well as legitimate tax avoidance, into mainstream political debate. The favourable personal tax arrangements for private equity executives and other high earners—many in the financial services sector—stem in part from Gordon Brown’s decision back in 1998 to reduce the capital gains tax on the sale of business assets to a mere 10 per cent (if the asset had been held for ten years or longer) in order to reward risk. But the low tax bills of some of the very rich can also be located in historical arrangements like the non-domicile status of some rich foreigners (or people who can claim they are foreigners) living in Britain, and the sheer inventiveness of the tax avoidance industry, with its use of trusts, offsetting losses, offshore tax havens and so on.
This is an old subject, but it has been given a new twist in recent years by the growing importance to the British economy of the success of the financial services sector in general and the City of London in particular. Combined with other trends, such as globalisation and the rise of “winner takes all” markets in top talent, this has made Britain a magnet for a large number of the new super-rich.
If you are a subscriber, please log in »
This article is available to subscribers only
Subscribing to Prospect is the most reliable and convenient way to receive the magazine every month, and offers the best value.Subscription Types:
Online
An online subscription offers you complete and unlimited access to the entire website, including our searchable archive of every back issue of Prospect, and a PDF edition of each new issue: all this for just £20 per year. Purchase an online subscription »Renewal
Renew an existing subscription »Institutional access
If you are a library, business organisation or any other large institution that needs a multi-user licence, you can obtain institutional access.
Share
Subscribe to post comments
Print
