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Patriotic: Sir Peter Wood has always willingly paid UK taxes on his self-made wealth
Sir Peter Wood, one of Britain’s most successful entrepreneurs, is unhappy. He is speaking from his Palm Beach villa, a short distance from Donald Trump’s Mar-a-Lago, where he is having a few days of relaxation in the US, after attending a board meeting of a Boston insurer.
After that, he is returning to the UK to vote, with a sense of trepidation. He fears Sir Keir Starmer’s Labour government may force him to leave the country, even though he has always willingly paid UK taxes on his self-made wealth.
Wood created three businesses that were all FTSE 350 companies in their time – insurance firms Direct Line, Esure and GoCompare – and prides himself on having always paid his taxes in his home country. Indeed for several years he has featured high up the list of Britain’s top taxpayers. His bills have been in excess of £200 million when he has sold businesses.
‘I have been in the top ten for years,’ Wood says. ‘I am the sort of person who always pays my UK tax. It’s the patriotic thing to do.’
Wood knows his estate, which includes shareholdings in funeral homes firm Dignity and stamp auctioneer Stanley Gibbons, will be hit by 40 per cent inheritance tax. But he fears Labour, in a desperate grab for tax revenues, is about to target the wealthy again.
So the entrepreneur, who spends five months in his homes in the US and Spain, is now thinking of shielding his wealth overseas. Paradoxically the chemicals billionaire and Manchester United shareholder Jim Ratcliffe, one of the rich who has come out in favour of Labour ahead of the election, opted some years ago to move his personal tax status to Monaco.
Wood regards this as the height of hypocrisy: ‘Jim Ratcliffe is not paying any income tax in the UK. His companies do, but he personally won’t pay any tax. Now he supports Labour. That’s a bit rich.’
Wood is not alone in his fears over Labour wealth taxes. A friend who is still working hard in textiles in his late 70s tells me that his son-in-law, a billionaire real estate magnate, decided some months ago – amid expected rises in taxes on capital and wealth – to move his family and his tax domicile from Britain to Monaco. He was not prepared to see an empire, which owns some of the nation’s most recognisable property assets, broken up to pay UK taxes.
Starmer and Shadow Chancellor Rachel Reeves speak often of closing tax loopholes. This is shorthand for imposing new levies. Fear of what is to come already is driving fortunes overseas. The Thatcher revolution, which saw Britain’s exiled rich return to spend and invest, is in danger of being reversed. Labour’s election vows of ‘wealth creation’ stand to founder before it has taken office.
The UK’s entrepreneurs and super-rich fear the onslaught. It is tempting to say good riddance. But – if Labour is serious about firing up growth and restoring stability to economic policy – attacks on the well-heeled can only dampen spending, saving and investment.
Labour is publicly targeting what it considers privilege with a 20 per cent VAT levy on school fees. And North Sea oil exploration has been brought to a halt by plans to close so-called investment loopholes on an industry already paying a headline tax rate of 75 per cent. But there could be much more to come from Labour as the fragility of the costings in its manifesto and the great hole in the public finances is exposed. The independent Institute for Fiscal Studies describes a ‘toxic mix’ in public finances. Labour’s triple tax lock, which bars rises in VAT, Income Tax and National Insurance Contributions, requires Reeves to find other targets.
Pre-announced are plans to focus on non-doms and private equity barons. Other targets are likely to be on her unannounced agenda. In 1997, when Labour inherited far more stable public finances, it funded new spending from taxing dividends paid to pension funds and power utilities.
This time a popular suggestion is to tax capital at the same rate as income. Tax relief on pension fund contributions may also be at risk discouraging already inadequate savings.
Changes started by Jeremy Hunt to the non-domicile regime have already seen many super-rich pack their bags.
One source told me in three years they will all be gone, and a huge amount of money spent and invested in the UK will have vanished for ever.
Entrepreneurs such as Wood are exasperated.
‘I have paid UK taxes because I could afford to do so,’ he says. One of Wood’s daughters is a top interior designer, and he adds: ‘Her business is drying up because non-doms and top salespeople are fleeing the country.’
Britain faces both a public and private investment shortfall essential for growth. Driving our most brilliant business brains away can only stunt recovery.
