UK GDP will be over £1bn lower by the end of the current parliament if 25% of non-domiciled taxpayers leave the UK, as predicted by the CEBR.
The CEBR used OBR modelling to assess the macroeconomic impacts of non-domiciled taxpayers leaving the UK. Under its central scenario of 25% emigration, output will be 0.04% (£1.1bn) lower relative to the OBR’s baseline, by the end of the current parliament, while cumulatively economic activity will be £3.9bn lower.
Total tax receipts are also predicted to be £4.6bn lower than forecast by the OBR in the final year of the forecast, more than halving the fiscal headroom available to the Chancellor, while receipts are on course to be a cumulative £17bn lower under the current parliament.
“Overall, we estimate the impacts of non-domiciled taxpayers exiting the UK to be mildly negative,” the report said. “This contrasts somewhat with the government’s assessment that the recent change to the non-domiciled regime ‘is not expected to have any significant macroeconomic impacts’.”
While some members of the Labour party are pushing for a flat wealth tax, targeting those with assets above £10m, Chancellor Rachel Reeves is said to be reluctant to pursue that avenue in recognition of the likelihood wealthy individuals will leave the UK.
