A trickle of British tax-refugees heading to Spain could swell to a flood if the new Labour government acts on its strong hints of soaking the rich.

In the last few weeks the British press has been full of stories of non-doms and British millionaires leaving, or planning to leave the country, to avoid an expected attack on wealth in the pending budget statement. Since winning power with a stonking parliamentary majority, British PM Sir Keir Starmer has said that “those with the broadest shoulders should bear the heavier burden”, which is a euphemism for soak the rich.

Articles mention a report by Henley Private Wealth Management arguing that the UK will lose 9,500 millionaires this year, and a study by the the Adam Smith Institute saying the share of the UK population who are millionaires is set to fall by 20 per cent over the course of the current Parliament. The Guardian has celebrated this exodus of wealth in an article titled ‘Britain’s millionaires are fleeing. Good night and good luck, I say’.

An article by Emma Duncan published in The Times points out how foolish this attitude is. “We need the rich,” she writes. “The Tories have already been, quietly, emptying their wallets — taking money away from the richest and poorest 10%, and giving it to middle-income people. The top 1% now contribute nearly a third of total income tax receipts and the top 10% more than a half. Push that much further, and they will hop it. They are a mobile lot, and Labour’s plan to crack down on non-doms is already leading to a dribble of departures. Reeves needs to avoid turning that into a flood.”

On an anecdotal level I know of several non-dom families leaving the UK because of the new government. One family is leaving Yorkshire where they spend several hundred thousand pounds each year renting a farm, employing locals, and sending their kids to private school. They are upping sticks and heading for Madrid. In fact, all the cases I know of are healing for Spain.

British tax refugees head for Spain

London-boy Charlie Mullins, founder of Pimlico Plumbers, is a multi-millionaire who has already fled the UK for Marbella, telling the Sunday Times  “I am taking all of my money and investments out of the UK. The government is driving people with money away from the country. Why would people stay in the UK?”

Back in July, shortly after Sir Keir Starmer’s Labour party won the General Election, I wrote that the British (and French) election results would boost demand for property in Spain. I noted that, as higher taxes begin to bite, a growing number of wealthy individuals would likely “vote with their feet.” Spain, I argued, would become a prime destination, especially given that France appeared to be teetering on the edge of a Jacobin-style regime—an outcome temporarily averted, thanks in part to Brexit’s old ally, Mr. Barnier.

Spain is an obvious destination for two reasons: 1) It offers an attractive lifestyle and climate, which is why hundreds of thousands of Brits have already made it their home, and 2) It has tax schemes like the ‘Beckham Law’ and ‘Digital Nomad Visa’ that offer a type of non-dom status that could suit wealthy UK residents, including UK non-doms, looking for a safe haven to avoid Labour’s expected attack on wealth. 

Spain also has many excellent international schools, and doesn’t charge VAT on private education. The UK is now the only Western country / OECD country to charge VAT on education, if not the only country in the world. No other country would be stupid enough to punish parents paying for private education.

Labour’s record in its first 100 days in office suggests it might not win a second term, so Spain could be the perfect place to sit out a one-term Labour government.