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Tuesday 20 February 2018

Britain’s rich planning to ‘safeguard’ wealth against Corbyn-led government

Some wealthy individuals are getting ready to move cash out of the UK and into European funds in order to protect their assets.

Labour leader Jeremy Corbyn
Labour leader Jeremy Corbyn

By Kalyeena Makortoff, Press Association City Reporter

Britain’s rich are forming contingency plans that would safeguard their wealth in the event of a Jeremy Corbyn-led Labour government.

Asset managers and individuals alike are understood to be preparing for a raft of reforms under a socialist cabinet, which could introduce tax hikes on wealth and higher earners, and cancel some bands of tax relief.

Some high rollers are getting ready to move cash out of the UK and into Continental Europe in order to protect themselves from the changes, the Press Association has been told.

Jason Hollands, managing director at Tilney Investment Management Services, said that while Brexit is undoubtedly sparking jitters around UK investments, Labour’s growing popularity is playing its own part.

“The potential election of a hard-left government led by Jeremy Corbyn and John McDonnell is also a factor creating anxiety towards UK investments amongst many of our clients,” he said.

“Many of them are nervous about [Corbyn] and that’s something that comes up as we go around the country and do client seminars and through Q&A sessions,” Mr Hollands told the Press Association.

Some investors have already withdrawn from UK equity funds within the last 12 months.

Pension tax reliefs for more affluent people are also likely to face eradication under Labour, and Mr Hollands says Tilney has been encouraging clients to take advantage while they can.

“There has been feeling for some while that these generous tax reliefs are on borrowed time,” he said.

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Wealth inequality

“All parties have clearly been eyeing this as an area of potential change, but if we ended up with a Corbyn government – and their instincts are much more in favour of wealth taxes than any governments we’ve seen in the UK for some time – you could quite easily understand why they might be the ones to pull the plug on higher tax relief for pensions contributions.”

Concerns about Labour were brought to the fore last year when Morgan Stanley’s European equity team warned investors of the “perceived risks of an incoming Labour administration”.

It said a Labour government could result in a “radical change” in UK policy, making domestic policy a “bigger risk than Brexit”.

But the UK is already facing an economic slowdown under the current Conservative Government, with concerns around Brexit having already hammered the pound, while property prices in 2017 experienced their slowest annual growth in five years.

Consumers are also facing inflation at 3.1%, which has squeezed spending and put pressure on businesses across the country.

A Labour spokesman said: “After seven years of Tory austerity the prospects for economic growth, productivity and people’s living standards have all been revised down.

“The next Labour government will provide the major boost to investment business groups like the CBI and the FSB have been calling for, protect 95% of people from any tax rises and ensure our public services work for people not profiteers.

“Labour will put an end to the rigged economy that benefits only the super-rich, to build a society that works for the many, not the few.”

Press Association

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