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The Sunday TimesApril 26, 2009

We’re fleeing high-tax Britain, say City tycoons

From The Sunday TimesApril 26, 2009

We’re fleeing high-tax Britain, say City tycoonsIain Dey and Matthew Goodman
Two of Britain’s best known entrepreneurs are considering leaving Britain in protest against Alistair Darling’s new 50 per cent tax rate, as leading figures from business and the City warn of a talent exodus.

Hugh Osmond, the pubs-to-insurance entrepreneur, is thinking about a move to Switzerland. Peter Hargreaves, the £10 million-a-year co-founder of Hargreaves Lansdown, the financial adviser, is looking at the Isle of Man or Monaco. More are likely to follow.

Osmond, whose net worth is estimated at £230 million, said: “A lot of people will be off. It’s highly unlikely that I will continue to have the UK as my country of residence. It’s just as easy to work from any close location – Switzerland or wherever.”

Hargreaves, facing an extra £500,000 on his tax bill, warned: “I won’t pay, I’ll leave.”

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Robert Pfeiffer, a partner at Compass Advisers, a mergers and acquisitions firm, said that businesses such as his did not need to be based in Britain. “We all love living in London but in the end it becomes an economic decision. The clients don’t care.”

He and his partners were discussing a move to Geneva. “Do we want the hassle of moving? Probably not. But there comes a point economically when it’s hard to justify being here.”

And Philip Lambert, chief executive of Lambert Energy, said his consultancy was “seriously considering” relocating abroad, saying the state had “total hostility or apathy towards entrepreneurs”.

Dozens of Britain’s best-known business figures have condemned the new tax grab. Sir Richard Branson said it was a “block to the next wave of entrepreneurs”. Tim Waterstone, founder of the Waterstone’s bookshop chain, slammed the tax as a “disincentive to entrepreneurs”.

Stanley Fink, the former chief executive of the Man Group hedge fund, said: “Nobody believes that 50 per cent is a natural stopping point. There’s nothing to say for the richest it won’t go to 60 per cent, say for those earning over £200,000.

“There will be some successful entrepreneurs who decide to move to Switzerland or Ireland. I’m aware of one or two people who made active plans to decamp when Labour announced 45 per cent and will put those plans in motion.”

From next year anyone earning more than £150,000 a year will pay 50 per cent income tax. The move replaced the 45 per cent tax bracket threatened in the pre-Budget report last November.

The Budget revealed that the UK’s national net debt has climbed to £743.6 billion. The Treasury has said the new tax on high earners will raise about £2 billion a year to help mend the hole in the public finances.

Businessmen warned that raising taxes on the rich would do nothing to boost the Exchequer, as the wealthy can always find ways to avoid it.

Sir John Madejski, the founder of the Auto Trader publishing empire and chairman of Reading Football Club, said: “The powerhouse of this country is the entrepreneurs, the people who make money. To penalise them is silly.”

Luke Johnson, chairman of Channel 4 and founder of Risk Capital Partners, said: “It sends a terrible signal. It proves that whatever the rhetoric from Brown on the entrepreneur economy, the reality is that they don’t believe in it.”

Simon Walker, head of the British Venture Capital Association, said: “There are only six countries in the OECD with a higher tax rate than the UK – places like Denmark, Sweden and Finland. But the point about those countries is that things work there. People feel they can send their children to the local school and use the capital’s underground transport."