Nearly a third of Britain’s billionaires have either moved or are relocating to tax havens, where some have broken U.K. law by bankrolling political parties, a major investigation said on Thursday.
The Times newspaper published a series of reports detailing allegations of Britain’s ultra-rich hiding billions of pounds from the U.K. Treasury in taxes over the past decade.
The report came out days after the government drew public fury for delaying a vote on proposed legislation aimed at ending secret company ownership in offshore territories.
“We must stop tax evasion so that the wealthiest pay their fair share,” Margaret Hodge, a leading lawmaker from the main opposition Labour Party who co-sponsored the tax haven measure, tweeted in response to The Times reports.
“Public registers and more transparency are the next big step for fairer tax.”
Capital Flight
Prime Minister Theresa May’s government did not immediately respond to the investigation.
The Times said that 28 out of the 93 British billionaires it found through public records “have moved to tax havens or are in the process of relocating.”
It said almost half of the 28 have left in the past decade.
The Times said those in the process of moving included Jim Ratcliffe, Britain’s richest man and a major Brexit supporter. His chemicals firm is valued at £35 billion ($46 billion).
Thursday's Times: "British billionaires rush to world's top tax havens" (via @AllieHBNews) #bbcpapers #tomorrowspaperstoday pic.twitter.com/RoAecSnNHt
— BBC News (UK) (@BBCNews) March 6, 2019
The Sunday Times reported last month that Ratcliffe’s move to Monaco, where it said 10 British billionaires and 408 U.K. business owners live, could cost the Treasury up to £4 billion.
Asked about his rumored move last October, Ratcliffe told Britain’s Press Association news agency that he was staying in Britain.
The Times said big business owners were trying to avoid paying Britain’s relatively high 38.1 percent income tax on dividends – the cash payments made by corporations to their shareholders.
It is effectively a profit tax, since business owners hold a large portion of their company’s shares.
Tax Havens
Companies registered in offshore tax shelters such as the Channel Islands or countries like Switzerland and the United Arab Emirates pay little to no tax.
The Times said the exodus was spurred by a hike in income tax rates for top earners to 50 percent in 2010, which was reduced to 45 percent in 2013.
New rules from 2013 making a switch in tax residency easier also contributed, The Times said.
Bankrolling Elections
But some of its most damning allegations concerned political contributions.
The Times said successive U.K. governments have failed to properly enact a 2009 law banning large donations from anyone residing abroad for tax purposes.
It said tax-evading business owners and their companies have made political contributions worth £5.5 million over the past decade.
Prime Minister May’s Conservatives accepted £1 million from these entities in the months leading up to the 2017 snap general election, The Times said.
It added that several of these billionaires have also received honorary titles such as baron, knight, and dame.
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