Settling up taxes. Or how to stop billionaires dining and dashing.
There’s a tax that the greedy super-rich don’t want you to know about: it’s called a settling up tax.
While a majority of the wealthiest are proud to live and pay into the UK— in fact, 72% of millionaires want to be taxed more— a small number of greedy super-rich love to threaten upping sticks for tax havens. It’s a tactic to scare us into keeping their taxes as low as possible.
Time and again research and polling shows family connections, cultural roots and lifestyle considerations are all more compelling than saving a few quid (especially when you have millions). But unfortunately, there will always be a few individuals ready to rip us off by moving their cash overseas. That’s where settling up taxes come in.
What can we learn from the tale of Nikolay Storonsky?
Last week, it was reported that Nikolay Storonsky, the billionaire CEO of Revolut, officially moved his tax residency from the UK to the UAE. Storonsky hasn’t officially given a reason for relocating, but it could well be because the UAE doesn’t tax personal income.
And Revolut — of which Storonsky owns ~25% — is expected to hit the stock market soon, so when he collects his share of the expected $200 billion sale he won’t have to pay a penny in capital gains tax.
Revolut was founded in a London tech incubator. Its rise was powered by UK-trained talent, UK legal protections, UK regulators, UK market access and UK infrastructure and public services. And here’s the kicker: the bank’s HQ is staying in London.
So, Storonsky is reaping the benefits of Britain— just not paying for them. That’s a slap in the face to every UK taxpayer. So, what should we do about people like Nikolay?
We need a settling up tax, now!
When the super-rich skip town, they leave a hole in the public purse. That’s because we’ve spent a lot of money to create the environment that allowed those people to get super-rich, with the expectation that they’d pay back into that system, through taxes, if they had such success.
There are of course plenty of legitimate reasons someone might want to move anyway. But whether their aim is tax-dodging or not, it’s only fair that they settle up before they go.
Just because you’re eating dinner elsewhere, doesn’t mean you can blow off your lunch bill (especially when you had the lobster and caviar). This is where a settling up tax comes in.
A settling up tax is levied on those with a lot of unrealised gains on shares and financial assets. So you can’t just hide your income from HMRC, by keeping it in assets, then cash it out when you reach a tax haven.
Countries like the US, France, Germany, Spain, Canada, Australia, Norway and Japan already have settling up taxes, sometimes known as an exit tax.
You can’t win a tax rate race to the bottom with countries offering 0% income tax. But you can make the UK a better place to live, work or start businesses— by investing in infrastructure, education, healthcare, transport, social security, arts, culture, and sports— as long as everyone pays their dues.
This story was featured in our weekly newsletter. To hear these sorts of stories first, and discover how you can take action for a fairer tax system in the UK, sign up below.