There has been a surge in the number of Brits looking to change their residence or shift their money abroad before the new tax year.
In a bid to bring spiralling government borrowing back under control, chancellor Alistair Darling has announced a raft of tough new tax hikes to be implemented next April.
For the estimated 350,000 people earning £150,000 or more, the news is particularly bleak.
They will be hit with a 50%
tax rate on their income, have their personal allowances scrapped and a their tax relief on pensions gradually reduced from 40% down to 20%.
One of Europe's highest tax rates
The move means Britain's top earners will face the highest tax rates since the 1970's and one of the highest in Europe.
Foreign Currency Direct head Stephen Hughes believes this may force many to move abroad, actually costing the government more in lost taxes than in gains from high earners who choose to stay.
“In France, top earners pay a maximum of 40%
tax, and it may not be just individuals who choose to relocate; companies looking for new locations will undoubtedly look at this possible "brain drain" as a reason to look at locations outside of the UK,” says Hughes.
Worried about preserving their assets
Foreign exchange broker Caxton FX claims it has been “inundated” with queries from clients looking to protect their money from the Treasury's clutches.
According to the broker, some are simply looking to transfer capital overseas, while others are already based part of the year out of the country.
There are also some with second homes in the UK who will suffer withdrawal of holiday let
tax relief and as a result are thinking of selling up and buying property overseas.
“These people are not celebrities or high profile people who figure in the Rich Lists, but simply clients with some capital worried about preserving their assets,” says Caxton FX managing director James Hickman.
"Our view is that Sterling will continue to improve against the Euro over the summer and the autumn as the full extent of the recession in Europe becomes more obvious and that the next twelve months will be a good time to make the move.”
Lower earners will feel pain too
While top earners will be the first to feel the hikes, the massive scale of the government's fiscal black hole means it is only a matter of time before lower earners are hit as well says certified financial planner Alan Dick.
“It is clear that the tax burden on consumers has to rise dramatically,” says Dick.
“While the current budget emphasis is on higher earners, reality means that in future even consumers on more moderate incomes will face higher tax charges in one way or another.
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