TAXATION

DETAILS

EXIT TAX: AN MMT DESIGN

1. THE 'FISCAL ANCHOR' EXIT TAX (MMT VERSION)

Core Idea:

• This tax isn’t about "stopping money from leaving" (which is impossible in sovereign currency systems) but about ensuring wealth holders remain subject to the fiscal system that gives their assets value.

Mechanism:

• Trigger: When a taxpayer renounces residency or moves 50%+ of their assets offshore.

• Tax Base: Unrealized gains on domestically anchored assets (stocks, real estate, IP etc.).

• Rate: By tier and type, with payment based on the highest qualifying category e.g. £500k (0%) of public bonds (25%) being moved to the Cayman Islands (60%) would be taxed at 60%.

  • 1. By net worth/income level

    • Wealthier individuals pay higher rates, reducing the burden on middle-class expatriates.

      • Income/Wealth Threshold: Less than £1m net worth

      • Exit Tax Rate: 0%

      • Rationale: No tax on average earners to avoid discouraging mobility.

      • Threshold: £1m–£5m

      • Rate: 15–20%

      • Rationale: Moderate tax on upper-middle-class wealth.

      • Threshold: £5m–£10M

      • Rate: 25–30%

      • Rationale: Targets affluent individuals with significant assets.

      • Threshold: £10m–£50m

      • Rate: 35–45%

      • Rationale: High rate on millionaires to recoup future tax losses.

      • Threshold: £50m+

      • Rate: 50–60%

      • Rationale: Maximum rate for ultra-high-net-worth individuals.

    • Example:

      • A £2m net worth individual pays 20% on deemed capital gains.

      • A £100m net worth entrepreneur pays 60% on unrealized gains.

  • 2. By asset type

    • Different assets could be taxed at varying rates to encourage productive investment.

      • Asset Type: Shares in private businesses

      • Tax Rate: 15–25%

      • Rationale: Lower rate to avoid harming entrepreneurship.

      • Asset: Public stocks & bonds

      • Rate: 25–35%

      • Rationale: Moderate rate on liquid assets.

      • Asset: Real estate (non-primary)

      • Rate: 35–45%

      • Rationale: Higher rate on passive investments.

      • Cryptocurrency & offshore holdings

      • Rate: 45–60%

      • Rationale: To penalise tax-evasion-prone assets.

    • Example:

      • A founder leaving with £10m in private company stock pays a minimum of 25%.

      • A real estate investor with £10m in property pays a minimum of 35%.

  • 3. By destination country (tax haven vs. non-tax haven)

    • Higher rates for moves to low-tax jurisdictions to discourage aggressive tax planning.

      • Destination: To a country with tax treaty (normal rates)

      • Tax Rate: 15–30%

      • Rationale: Encourages moves to cooperative jurisdictions.

      • To a tax haven (0–10% corporate tax)

      • 40–60%

      • Penalizes harmful tax avoidance.

    • Example:

      • Moving to Germany (high-tax) → up to 30% exit tax.

      • Moving to Cayman Islands (no tax) → up to 60% exit tax.

  • 4. Deferral options (to reduce hardship)

    • Deferred payment (with interest) for illiquid assets (e.g. business shares).

    • Installment plans for middle-tier taxpayers (£1m–£10m).

    • Immediate payment required for ultra-wealthy (£50m+) to prevent evasion.

• Justification:

  • Since the state’s power to tax drives the currency’s value, elites who benefit from this system must pay to opt out of its obligations.

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2. CREDIT AGAINST FUTURE DOMESTIC LIABILITIES (NO DOUBLE TAXATION)

Problem:

• Traditional exit taxes can be seen as punitive "double taxation" if the emigrant later pays taxes abroad.

Solution:

• Make the exit tax a prepayment of future domestic liabilities:

  • If the taxpayer returns, the exit tax is credited against future capital gains/wealth taxes.

  • If they stay abroad, it’s a final settlement for exiting the fiscal system.

Example:

• A billionaire pays a £300m exit tax when leaving.

• If they return in 10 years, that £300m offsets future wealth taxes.

• If they stay gone, the state keeps it as a fair severance fee.

Justification:

• This aligns with the idea that taxes are an economy-balancing tool, not revenue-raisers.

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3. LIQUIDITY PROTECTIONS (NO FIRE SALES)

Problem:

• Forcing immediate payment could destabilise markets.

Solution:

• Illiquid assets? Defer payment with the state accepting bonds or equity stakes.

• Example: A founder with £1b in private company stock could:

  • Pay 60% over 10 years (like a wealth tax), or

  • Surrender non-voting equity to a public trust (socializing gains).

MMT Logic:

• The state cares about real resource control, not just currency extraction.

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4. TAX HAVEN SURCHARGE (BEHAVIOUR-NUDGING)

Rule:

• Moving to a tax haven (0–10% corporate rate)? Add a 20-30% surcharge.

• Moving to a high-tax treaty country? No surcharge.

MMT Rationale:

• This prevents 'free-riding' on the fiscal system as those who exploit tax havens undermine aggregate demand.

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5. REINVESTMENT REBATE TO ENCOURAGE DOMESTIC ANCHORING

Carrot:

• If departing wealth holders keep X% of assets domestically, they get a partial rebate.

Example:

• A billionaire keeps 30% of assets in productive investments or green bonds? Exit tax drops from 60% to 50%.

Benefit:

• Ensures wealth still supports domestic policy space, even if ownership changes.

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WHY MMT ANGLE WORKS

• 1. No 'capital flight' panic as the focus is on real resource anchoring, not currency mechanics.

• 2. Treats taxes as a systemic obligation, not a punishment.

• 3. Prevents greedy so-called 'elites' defecting while allowing mobility and without causing harm.

FINAL DESIGN SUMMARY

• Tax Base

  • Unrealised gains on domestic-anchored assets instead of all global assets

• Payment Flexibility

  • Can pay via deferrals, equity swaps, bonds rather than cash-only, avoiding liquidity crises.

• Double Taxation Fix

  • Credits if taxpayer returns, so they can't act like it's a pure money grab

• Tax Haven Penalty

  • +20-30% for havens, 0% for treaty countries instead of a one-size-fits-all rate

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OBJECTIONS & REBUTTALS

• "This is just a wealth tax in disguise!"

  • Yes, and? MMT sees taxes as tools for macroeconomic steering, not revenue.

• "The rich will still hide assets!"

  • We'd pair this with a real-time wealth registry like Norway’s public asset database to force them to declare what they own.

• "It’s unfair to punish mobility!"

  • It’s not punishment, it’s settling obligations to the system that enriched them.

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CONCLUSION

An Exit Tax isn’t about "stopping money", it’s about stopping sabotage by greedy elites. By designing this tax as a prepayment of fiscal obligations, rather than a confiscatory penalty, it aligns with MMT’s sovereign currency principles. The goal isn’t to trap wealth but to ensure those who benefit from the system can’t defect without contributing.

An MMT-compatible exit tax:

• 1. Taxes unrealized gains on domestically anchored assets (60% max).

• 2. Credits payments if the taxpayer returns.

• 3. Allows deferrals to prevent fire sales.

• 4. Punishes tax haven moves with surcharges.

• 5. Rewards domestic reinvestment.

This erodes generational wealth without causing capital strikes, because under MMT, the real power isn’t money, but who controls the resources.

TAX FAIRNESS: TAXING WEALTH NOT WORK

• We would establish a wealth registry with legislation to mandate disclosure of assets, and integrate data from HMRC, the Land Registry, Companies House, and financial institutions to create a central register.

• Net wealth between £3m-£9.99 million will be taxed annually at 5%, £10m-£49.9m at 10%, £50m-£99.9m at 15%, £100m+ at 20%. We will brand it as ‘Anti-Guillotine Insurance’ so the wealthy know why they’re paying it, and if they are caught trying to dodge it, they will have to explain why. £50m is £2281 per day if obtained at age 30 and you live until 90 – that’s more than enough. Taxing wealth is vital because money = power, and people with massive amounts of wealth can hold disproportionate influence over the political process which is unfair on everyone else. If they want to argue for their material interests, they should do so on the same level as everyone else.

• The above wealth tax/AGI will be coupled with a one-time ‘Look-Back’ wealth tax on anyone who left the UK in the previous 5-10 years and has a net worth above £3m. The bandings shall be as above but +5% to firmly deter anyone trying to pre-emptively dodge the Anti-Guillotine Insurance by fleeing before it is implemented. Many countries have retroactive tax laws so this is legally defensible.

• Council Tax will be replaced with a Land Value Tax on the unimproved value of land to discourage speculation and hoarding:

  • 0.5% / 1% for primary residences & smallholdings (<5 acres)

  • 2% for residential/commercial land not owner-occupied

  • 5% for estates >1000 acres & land held by absentee owners

  • 10% for vacant/derelict land in urban areas

• Capital Gains Tax will be set at the top rate of income tax +5%, will now include unrealised gains at death, and the annual CGT allowance will be scrapped. The +5% is so we tax wealth more than we tax work.

• Dividend Tax band rates will be aligned with income tax +5% i.e. Basic Rate: 8.75% (2025-26) to 25%, Higher Rate: 33.75% to 45%, Additional Rate: 39.35% to 50%

• National Insurance is paid at 8% by anyone earning £12,000-£50,000 before dropping to 2%. We will abolish this drop to 2% so it is a flat rate of 8% for everyone over £50,000 too. There is no justification for those on larger incomes paying smaller contributions than those who earn less.

• National Insurance is currently not paid on investment income. We will require this and it shall be paid at the rate of the old Investment Income Surcharge which was 15%.

• Assets held in UK-registered trusts/shell companies that remain dormant/unused/unoccupied after 5 years shall be liable for an Abandonment Tax of 30% of their value, rising 3% per year. After 10 years, if they still remain in their previous condition, they shall be deemed as fully abandoned and the relevant local authority will be authorised to confiscate and reutilise/liquidate them in accordance with public purpose.

• Abolish tax reliefs for the wealthiest 30%.

• Inheritance Tax will be scrapped and replaced with a Lifetime Gifts Tax.

  • Gifts worth over £10,000 a year would be taxed at 20%.

  • Lifetime total gift limit of £200,000. All gifts after this point of any size are taxed at 20% and all previous gifts lose exemption status i.e. gifter has to pay 20% tax on the full £200,000.

  • Inherited offshore assets will be charged at 70% if repatriated.

  • Family Home Exemption: First £500,000 exempt from LGT so family home can be passed to children.

  • No 7-year exemption rule for LGT.

  • Gifts must be to family members only to qualify for exemption. Gifts to trusts/funds/other opaque structures would not be exempt.

  • No special breaks for businesses or land.

  • Offshore transfers subject to new exit tax rules.

• A Tobin Tax of 0.5% on short-term currency transactions (i.e. any trade settled within 24 hours)

  • Institutions designated as market makers taxed at 0.3%.

  • Long-term investments, directly-linked hedging on regulated derivatives and central bank operations exempted.

  • Could start at 0.1% and phase to 0.5% over 3 years to assess impact.

• Expand the scope of the Diverted Profits Tax by:

  • Lowering the application threshold from £500m global revenue and £10m UK revenue to £250m and £5m respectively.

  • Abolishing the £1m avoidance threshold.

  • Expanding the definition of ‘artificial avoidance’ to include excessive intra-group payments, contractual misalignments, and where value creation occurs in the UK but profits are booked offshore)

  • Eliminating ‘adequate remuneration’ defences where the offshore entity has no real employees, offices or risk-bearing capacity, and excluding tax havens automatically.

  • Increasing penalties e.g. surcharges on late payments, additional levies on repeat offenders.

  • Applying the tax to UK-parented multinationals

  • Blocking UK deductions entirely for payments that trigger the DPT.

• Expand the General Anti-Avoidance Rule to:

  • Target ‘low-effort’ tax avoidance as well as abusive arrangements.

  • Include profit-shifting to tax havens.

  • Also cover VAT, stamp duty, LVT, Digital Services Tax etc.

  • Make companies prove their transactions have genuine commercial purpose.

  • Require companies to seek pre-approval for high-risk transactions.

  • Impose fines of 100%+ of the tax avoided like the USA’s accuracy-related penalty.

  • Hold directors personally liable.

  • Name-and-shame companies that trigger the GAAR.

  • Close ‘double-sipping’, ‘treaty shopping’, and debt shifting loopholes.

  • Align with other international measures and OECD’s Principal Purpose Test.

  • Allow HMRC to apply the GAAR retroactively for serious cases as Ireland does.

• Tighten CFC (Controlled Foreign Company) rules to limit exemptions and close loopholes.

• Expand Digital Services Tax.

• Mandatory country-by-country reporting to force disclosure of where profits are earned and where taxes are paid.

• Align with the OECD’s Global Minimum Tax.

• Extend the Stamp Duty Reserve Tax to cover derivatives trading at the same rate.

• Higher-rate pension tax relief will be reduced to a flat rate of 20% and tax-free lump sums for high-value pensions will be capped.

• Loans secured against appreciating assets will be treated as ‘deemed income’.

• Strengthen/implement measures to end tax avoidance schemes (e.g. Buy-Borrow-Die, Profit Shifting and Transfer Pricing, Disguised Remuneration, ‘Bed & Breakfasting’, etc.) and any new ones that arise.

• Income tax cuts as a counter-balance to increased wealth/unearned income taxes. We believe in taxing wealth, not work.

• Tiering VAT to progressively target optional luxuries and free up essentials:

  • 0% rate: food, school catering, energy, water supply, banking, public transport, post, charity activities, refurbished electronics, disability equipment, core health provision, schools, colleges, universities, children’s clothes, cultural admissions

  • 10% reduced rate: amateur sports, air and boat transport, car & home insurance

  • 20% standard rate: most goods and services, private medical healthcare, private education, aircraft repair & servicing, freight transport outside UK, civil aeroplane sales, non-core financial services fees, other insurance, gambling transactions

  • 40% premium rate: private jets, helicopters, ships and their repairs; clothing, bags and general goods valued at £1000+ (musical instruments excluded); electronic goods valued at £5000+; private cars valued at £70,000+; agricultural vehicles valued at £150,000+

  • All providers of digital services must subscribe to UK VAT platform immediately to prevent them pretending sales are occurring outside the UK which gives them an unfair advantage over UK companies providing similar services.

• A Luxury Import Tax so wealthy consumers don’t try and circumvent the new 40% VAT rate by buying from abroad.

• Lower the annual ISA limit from £20,000 to £5000. No normal person on a normal salary can make use of the full £20k limit. It only benefits high-income/high-wealth people who don’t need this tax break.

• Expand the Marriage Allowance and Working Tax Credits.

• Alcohol Duty: Minimum pricing of £2.50 per litre of beer and cider, £6 per bottle of wine, £15 on spirits. Will mean premium alcohol sales (expensive wine, whisky etc) pay more which is fairer.

• End the Royal Family’s exemptions from inheritance, capital gains and corporation tax. They are public servants and should not be allowed to use these exemptions for their personal gain:

  • Require them to release personal tax records each year showing how much tax they’ve paid.

  • End rent payments to them from the NHS (for an ambulance storage warehouse) and other public organisations (the Army pays to train on Dartmoor, the Navy pays to moor and fuel fleet, St Johns Ambulance pays £60,000 to lease a garage while Charles is a patron of them etc).

  • End the Duchy of Lancaster’s ancient feudal right to charge for cables crossing the foreshore which nets them £28m per year.

  • End their charges for operating schools, churches, village halls, and charities on their land, as well as digging graves, sewage and gas pipes, pubs, distilleries, boat moorings, car parks and toll bridges.

HYPOTHETICAL SCENARIO: THE "MIDDLE-CLASS BOOST"

• Wealth Taxes Raised:

  • 5% wealth tax (>£3M, excluding primary residence up to £500K) → £42bn-£50bn/year

  • Extra tax on dividends/capital gains (aligning with income tax +5%) → £14bn/year (dividends), £12bn/year (CGT)

  • Land Value Tax at 0.5% (non-residential land + 2nd homes) → £15bn/year

  • Reform IHT (abolish reliefs, lower threshold to £250K) → £6bn/year

  • Total new revenue: £89bn-£97bn

• Tax Cuts:

  • Income tax:

    • Raise basic rate threshold from £12,570 to £20,000 (-£15bn)

    • Cut basic rate from 20% to 18% (-£8bn)

  • VAT:

    • Remove VAT on all home energy bills (-£6bn)

    • Cut VAT rate from 20% to 17% (-£15bn)

  • National Insurance

    • Reduce employee contributions from 8% to 6% (-£10bn)

• Total cost: £54bn

  • Leftover £35bn-£43bn: Could offset NHS pay rises (£7bn), make all buses free to use (£7bn), tripling free childcare hours (£10bn), eliminating council tax for those earning less than £30,000 (£8bn), high street business rate relief (£3bn) revenue-neutral.

  • Who Wins/Loses:

    • Wins: 90% of households saves £1500/year.

    • Loses: Top 1% (£3m + wealth) pay ~£68K/year (wealth tax + LVT + CGT).

• Timeline

  • Year 1: 2% wealth tax (>£3M) → balances VAT cut to 18%.

  • Year 3: 5% wealth tax → raise income tax threshold.

  • Year 5: Evaluate capital flight risks before further cuts.

HYPOTHETICAL SCENARIO 2: MIDDLE-CLASS BOOST+" (1% LVT VERSION)

• New Taxes:

  • 5% wealth tax raises £42bn/year

  • 1% LVT raises £30bn/year

  • Dividend/CGT hikes raises £26bn/year

  • IHT reform raises £6bn/year

  • Total new revenue: £104bn

• Enhanced Tax Cuts:

  • Income tax:

    • Basic rate threshold: £12,570 raised to £25,000 (-£25bn)

    • Basic rate: 20% cut to 17% (-£12bn)

    • Abolish 45% additional rate (merge into 35% higher rate) (-£5bn)

  • VAT:

    • Cut from 20% to 15% (-£25bn)

    • Expand zero-VAT to all essentials (energy, baby goods, bikes) (-£8bn)

  • NICs:

    • Employee rate: 8% cut to 5% (-£12bn)

  • Total cost: £87bn

  • Leftover £17bn:

    • £10bn: Free school meals for all primary kids

    • £5bn: Abolish TV license fee

    • £2bn: Rural broadband expansion

  • Who Pays?

    • Top 1%: Avg. £83k/year

    • Landlords (2nd home worth £400k): £4k per year LVT

    • 90% of households: Save £2,800/year

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COMPARISON

• LVT revenue

  • 0.5% LVT: £15bn

  • 1% LVT: £30bn

• Income tax threshold

  • 0.5% LVT: Raised to £20K

  • 1% LVT: Raised to £25K

• VAT rate

  • 0.5% LVT: Cut to 17%

  • 1% LVT: Cut to 15%

• Average worker savings

  • 0.5% LVT: +£1,500

  • 1% LVT: +£2,800

• Landlord costs

  • 0.5% LVT: £2000 per year

  • 1% LVT: £4000 per year

1. LEGAL FRAMEWORK

• New Legislation: A Wealth Transparency Act mandating disclosure of:

  • All assets over £50,000: Property, stocks, bonds, art, trusts, offshore holdings.

  • Debts and liabilities (to calculate net wealth).

• Penalties:

  • Criminal charges for deliberate non-reporting (like tax fraud).

  • Fines of 100% of undervalued assets (similar to IRS rules).

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2. DATA COLLECTION INFRASTRUCTURE

• Centralized Digital Registry:

  • Integrate data from HMRC, Land Registry, Companies House, and financial institutions.

  • Real-time updates (e.g. property sales, stock transactions).

• HMRC National Asset Protection Registry

  • A new division with legal authority to enforce wealth tax compliance.

  • Uses central registry to identify tax liabilities, conduct audits, impose penalties and prosecute evasion.

• Valuation Mechanisms:

  • Property: Automated valuations (like Zoopla + spot appraisals).

  • Art/Collectibles: Mandatory insurance appraisals.

  • Private Businesses: Revenue-based formulas (e.g., 5× annual profits).

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3. ANTI-AVOIDANCE MEASURES

• Trust Transparency:

  • Force disclosure of beneficial owners, eliminating anonymous trusts.

• Offshore Asset Reporting:

  • Automatic data-sharing with tax havens using Common Reporting Standard.

• Situs-Based Taxation:

  • Tax UK-based assets (e.g. London real estate) even if owned through foreign shell companies.

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4. POLITICAL WILL

• Public Support:

  • Polling shows 75% of Brits support wealth taxes.

• Opposition Challenges:

  • Wealthy donors/lobbyists would resist (e.g. non-dom reforms faced Tory backlash).

  • Workaround: Attach registry to anti-corruption or "oligarch" laws.

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5. INTERNATIONAL COORDINATION

• EU/US Data Sharing:

  • Leverage existing agreements (e.g. Foreign Account Tax Compliance Act) to track offshore wealth.

• Exit Taxes:

  • Impose up to 75% levy on unrealized gains for émigrés (like the U.S.).

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6. TIMELINE

• Year 1: Register all property and listed securities.

• Year 2: Add trusts, private equity, and art over £100,000.

• Year 3: Full enforcement with audits of top 0.1%.

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OBSTACLES & SOLUTIONS

• Valuing illiquid assets

  • Use conservative formulas and allow appeals

• Privacy concerns

  • Limit access to tax authorities and courts

• Cost (est. £500m–£1b)

  • The UK is monetarily sovereign and faces no fiscal constraint. The limit to its spending is the availability of resources.

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GLOBAL PRECEDENTS

• Norway: Publicly searchable wealth/tax records.

• Switzerland: Cantonal registries with strict compliance.

• France: Impôt sur la fortune required self-reporting + audits.

WEALTH REGISTRY

WEALTH TAX AND TRANSPARENCY ACT 2029

PART 1: WEALTH REGISTRY

SECTION 1.1: MANDATORY DISCLOSURE

• (a) All UK residents and citizens with net wealth exceeding £1 million must register with a new National Asset Protection Registry (NAPR) based inside HMRC.

• (b) Reportable assets include:

  • Land/property (UK and overseas)

  • Financial assets (stocks, bonds, crypto)

  • Trust/partnership interests

  • Luxury assets over £50,000 (art, vehicles, collectibles)

  • Pension pots over £500,000

SECTION 1.2: VALUATION RULES

• (a) Property: Higher of (i) Council Tax band midpoint or (ii) last sale price adjusted by Land Registry index.

• (b) Private businesses: 5× annual profits or book value.

• (c) Art/collectibles: Must obtain certified appraisal every 5 years.

SECTION 1.3: PENALTIES

• (a) Failure to register: 10% of unreported wealth and £10,000 per day late fees.

• (b) Undervaluation: 150% of owed tax and criminal liability for discrepancies over £10,000.

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PART 2: PROGRESSIVE WEALTH TAX

SECTION 2.1: TAX BRACKETS

• £3m–£9.9m: 5%

• £10m–£49.9m: 10%

• £50m–£99m: 15%

• £100m+: 20%

SECTION 2.2: RELIEFS

• (a) Primary residence: First £500,000 exempt.

• (b) Working farms/businesses: Deferral option if over 50% of wealth.

SECTION 2.3: PAYMENT

• (a) Due 31 January following tax year.

• (b) Illiquid wealth: Pay via 10-year installment plan + interest.

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PART 3: ANTI-AVOIDANCE

SECTION 3.1: TRUST REPORTING

• (a) All trusts with UK beneficiaries must disclose:

  • Settlors, trustees, and beneficiaries.

  • Assets held (no minimum threshold).

SECTION 3.2: EXIT TAX

• (a) Emigrants shall pay on unrealized gains (calculated as if assets sold):

  • 1. By Net Worth or Income Level

    Wealthier individuals pay higher rates, reducing the burden on middle-class expatriates.

    • <£1m net worth

      • 0%

      • No tax on average earners to avoid discouraging mobility.

    • £1m–£5m

      • 15–20%

      • Moderate tax on upper-middle-class wealth.

    • £5m–£10m

      • 25–30%

      • Targets affluent individuals with significant assets.

    • £10m–£50m

      • 35–45%

      • High rate on millionaires to recoup future tax losses.

    • £50m+

      • 50–60%

      • Maximum rate for ultra-high-net-worth individuals (billionaires).

  • Example:

    • A £2m net worth individual pays 20% on deemed capital gains.

    • A £100m net worth entrepreneur pays 55% on unrealized gains.

  • 2. By Asset Type

    Different assets could be taxed at varying rates to encourage productive investment.

    • Shares in private businesses

      • 15–25%

      • Lower rate to avoid harming entrepreneurship.

    • Public stocks & bonds

      • 25–35%

      • Moderate rate on liquid assets.

    • Real estate (non-primary)

      • 30–40%

      • Higher rate on passive investments.

    • Cryptocurrency & offshore holdings

      • 40–60%

      • Penalize tax-evasion-prone assets.

  • Example:

    • A founder leaving with £10m in company stock pays 20%.

    • A real estate investor with £10m in foreign property pays 35%.

  • 3. By Destination Country (Tax Haven vs. Non-Tax Haven)

    Higher rates for moves to low-tax jurisdictions to discourage aggressive tax planning.

    • To a country with tax treaty (normal rates)

      • 15–30%

      • Encourages moves to cooperative jurisdictions.

    • To a tax haven (0–10% corporate tax)

      • 40–60%

      • Penalizes harmful tax avoidance.

  • 4. Deferral Options (To Reduce Hardship)

    Deferred payment (with interest) for illiquid assets (e.g., business shares).

    • Installment plans for middle-tier taxpayers (£1m–£10m).

    • Immediate payment required for ultra-wealthy (£50m+) to prevent evasion.

• (b) Payment shall be based on the highest qualifying category e.g. £500k (0%) of public bonds (25%) being moved to the Cayman Islands (60%) would be taxed at 60%.

SECTION 3.3: SITUS-BASED TAXATION

• (a) UK real estate and shares taxed regardless of owner’s residency.

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PART 4: ENFORCEMENT

SECTION 4.1: HMRC POWERS

• (a) Access to bank/brokerage records without court order.

• (b) Whistleblower rewards: 10% of recovered evasion over £1m.

SECTION 4.2: INTERNATIONAL COOPERATION

• (a) Automatic data-sharing with:

  • EU (under DAC8)

  • USA (FATCA reciprocity)

  • Crown Dependencies (Channel Islands).

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TIMELINE

• Year 1: Registration for £10m+ wealth.

• Year 2: £5m+.

• Year 3: £1m+.

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REVENUE IMPACT

• Wealth tax (5-10%): £85–110b

• Penalties/evasion clawback: £5–10b

• Total: £90–120b

(Source: IFS modelling, assuming 65% compliance initially)

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WHY THIS WORKS

• Targets wealth inequality (top 1% own 36% of UK wealth).

• Makes NHS & social care spending revenue-neutral without raising VAT & income tax.

• Deters evasion through harsh penalties and transparency.

WITHHOLDING TAX - AMENDMENT TO FINANCE ACT

PART [X]: WITHHOLDING TAX ON PAYMENTS TO NON-COOPERATIVE JURISDICTIONS

SECTION 1: DEFINITIONS

• 1. "Tax Haven" means any jurisdiction:

  • Listed on the UK’s "Non-Cooperative Jurisdictions for Tax Purposes" (NCJT) list; or

  • With a statutory corporate tax rate below 10%; or

  • Lacking a Tax Information Exchange Agreement (TIEA) with the UK.

• 2. "Covered Payments" include:

  • Royalties (including IP licensing fees);

  • Interest (excluding bank deposits);

  • Dividends;

  • Service fees (management, technical, consulting);

  • Capital gains from UK asset disposals to tax haven entities.

SECTION 2: WITHHOLDING TAX RATES

• 1. Standard Rates (unless exemption applies):

  • Royalties: 30%

  • Interest: 20%

  • Dividends: 15%

  • Service Fees: 20%

  • Capital Gains (gross): 10%

• 2. Reduced Rates may apply if:

  • The recipient is a "qualified entity" (demonstrates substantial economic activity in the tax haven); or

  • The payment is taxed at ≥ 15% in the recipient’s jurisdiction (per OECD GloBE rules).

SECTION 3: OBLIGATIONS & ENFORCEMENT

• 1. Withholding Agent Responsibility:

  • UK payers (companies, banks, intermediaries) must deduct and remit withholding tax to HMRC within 30 days of payment.

  • Failure to withhold results in penalties of 100–200% of the tax due (similar to Diverted Profits Tax penalties).

• 2. Reporting Requirements:

  • Payers must file an annual return with HMRC disclosing:

    • Beneficial ownership of recipient entities;

    • Purpose of payment;

    • Proof of substance (if claiming reduced rates).

• 3. Anti-Avoidance Rules:

  • Treaty Override: UK tax treaties do not apply if the principal purpose of a transaction is tax avoidance (per BEPS Principal Purpose Test).

  • Look-Through Rule: Payments routed through intermediate jurisdictions (e.g., UK > Netherlands > Bermuda) are treated as direct payments to tax havens.

SECTION 4: EXEMPTIONS

• No withholding tax applies if:

  • The payment is < £10,000 annually per recipient (de minimis);

  • The recipient is a listed company in an OECD-approved jurisdiction;

  • The payment is already subject to UK corporation tax (e.g., via CFC rules).

SECTION 5: ENTRY INTO FORCE

• Applies to payments made on or after [1 April 2029].

• HMRC shall publish guidance within 6 months.

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ANCILLARY AMENDMENTS

• To strengthen enforcement, the Finance Act should also:

  • Expand HMRC’s investigatory powers (e.g., require tax havens to disclose UK-linked accounts).

  • Introduce a "Name & Shame" regime for corporations that repeatedly avoid withholding taxes.

  • Align with OECD Pillar 2 to ensure top-up taxes apply if effective tax rates remain <15%.

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JUSTIFICATION & LEGAL BASIS

• Compatibility with International Law: The UK can override treaties under the "anti-abuse" provisions of the OECD Model Tax Convention (Article 29(9)).

• Precedent: Similar rules exist in the EU’s ATAD Directive (exit taxes), US FATCA (30% withholding), and Germany’s "Blacklist" rules.

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