The Financial Times has reported that billionaire Peter Hargreaves, co-founder of Hargreaves Lansdown, has warned against increasing taxes on wealthy people because, he says, Britain cannot afford to lose more of its biggest taxpayers.
His argument is straightforward. Hargreaves apparently paid £210 million in tax last year. He says that if only a handful of people like him leave the UK, the resulting tax loss might run to £1 billion a year.
There are problems with this argument. First, there is remarkably little evidence that wealthy people leave the UK in significant numbers because of tax. Some will, of course, and some always have. Equally, wealthy people arrive here. People move countries for many reasons, of which tax is only one.
Second, as both Hargewaves and the FT appear not to know (which is worrying in both cases), the government's capacity to spend is not constrained by its ability to raise tax. The household analogy on which this argument relies is just bunkum, but both subscribe to it, or this story would not have been published
But another issue is also in play here. Suppose, for the sake of argument, that Hargreaves is right. Imagine that a very small number of extremely wealthy people could really deprive the government of large amounts of tax simply by changing their country of residence, and that those politicians erroneously think this matters. What follows?
The argument is that, as a result, the government should design its tax system to keep those people happy. The claim is that their threat to leave must influence tax rates and design. Their preferences would, as a consequence, influence tax policy in ways unavailable to everyone else. That is not really an argument about economics. It is an argument about power.
The suggestion being made is that because some people are extremely wealthy, they should have an effective veto over the tax system that parliament might otherwise choose to impose upon them. That is deeply troubling because tax, as I have often explained, including in my book The Joy of Tax, is one of the most important mechanisms available to a democratic government to shape the society for which it is responsible.
Tax does not fund government spending in a country like the UK, where the government creates the currency. We do not need Peter Hargreaves' £210 million before the government can pay teachers, nurses or anyone else. Tax is also important for other reasons. It helps control inflation. It redistributes income and wealth. It changes behaviour. It reduces inequality. And it is one of the mechanisms through which a democratic society decides what distribution of income and wealth it is willing to tolerate.
That is precisely why the threat of departure should not determine tax policy. Extreme wealth already provides considerable political power. It provides access to politicians, the means to fund political parties and campaigns, influence over think tanks and public debate, and access to advisers whose job is to protect wealth. The wealthy do not need another privilege in the form of an effective veto over taxation.
Peter Hargreaves is entitled to decide where he lives. So is any other billionaire. But parliament must be entitled to decide how income, wealth and gains arising in the UK should be taxed. If democracy means anything, the ability of the wealthy to threaten departure cannot be allowed to override that right.
The question is not whether Britain can afford to lose a few billionaires. It is whether Britain can afford to let billionaires decide its tax policy. I think the answer to that is clear.
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Allowing the mega rich to determine the structure of the state is to go back to the past. Not just the feudal system but even the 18th century where a handful of powerful men dominated the state. It took our ancestors 200 years to establish the democracy we had only a few years ago.
Ignoring that tax doesn’t fund spending and that fundamentally incredibly wealthy people shouldn’t determine government policy (Both of which I agree with), if Hargreaves paid £210m in tax last year just how much did keep for himself, and how much does he need?
Note, I struggled for a phrase avoiding the word “Earn”.
Much to agree with
My thought as well. I presume Richard could work out his remnant having paid £210m as his contribution to ‘Make Britain Great’ again.
Avarice knows no boundary on greed and when it’s gained as Peter gained it, the ingratiated soul wishes to keep it all. Rather sad that he can’t enjoy what he’s left with.
Agreed. And I could reverse calculate the number, but it is wealth beyond imagination or need whatever it is, so why waste time on it?
‘The Cunning of Unreason’ John Dunn (2008).
Basically this book reveals a lot about ‘partiality‘ in society – in other words we tend to like how we think over someone else’s thinking and politics has increasingly become a platform for this. Why? Well, look how politics is funded and how government is being woven into markets and losing its role as moderator.
The thing is, if you are rich and powerful YOUR partiality can be forced upon others.
Now, all you Pavlov dog haters of socialism – tell me how that is different to (say) soviet Russia or fascist Germany?
On the other side of the coin, unfavourable tax policies and skewed spending priorities are also driving low income peope out of the country too – but they don’t leave in private jets. They go out in wooden boxes.
Austerity has a huge, measurable cost in premature and excess death rates, which I am willing to bet, far outweighs the cost to the Exchequer of a few departing rich people.
Agreed
Maybe I am being too cynical, but I wonder whether the government truly cares about premature or excess deaths? Apart from the bad PR, I suspect that some of them would welcome the reduction in the need to provide the dreaded triple-lock pensions….
It’s an empty threat. Even if they do emigrate they leave behind physical assets, land, and businesses that continue to generate economic activity and taxable revenue. It’s disappointing that the media, especially the BBC, reports these threats, as well as the similar ones from the banks, as if they will destroy the country. I think that’s the more serious problem.
I think the point you make about democracy is spot on.
My question(s) are…
First, if Mr. Hargreaves is generating income for himself via dividends from HL (which I presume is the case), would leaving the country reduce his tax bill?
Second, should we tax UK citizens to some extent where ever they live (like the USA)?
a) Yes. There would be no additional income tax to pay – but the corporation tax in the company would still be paid.
b) Yes
I think I might need a blog or View On article on this subject. I have proposed it in my time, including when I had closer contact with the Treasury on behalf of the TUC.
This argument about fearing billionaires leaving the country is nonsense for many reasons, as you note.
One reason is that tax on the wealthy has less effect on the economy than one might think. Tax removes money from the economy (it’s not needed for the government to spend). The effect of removing that money depends on how fast it circulates in the economy. Notes and coins circulate about 29 times a year. But money saved by the wealthy hardly circulates at all in the real economy; it’s tied up in investments. So, if you tax people who primarily use notes and coins, the poor, it has a big effect. If you tax the wealthy, who have a low propensity to spend, it hardly matters.
Which is not to say we shouldn’t tax the wealthy. We definitely should, both to reduce inequality and to reduce their outsized political power. But we don’t need to do so to fund the government, and we should not fear the effects on the economy of taxing the wealthy.
Much to agree with
Given the current political emphasis by some at least on ‘Patriotism’ and the UK being ‘Independent’ to much behaviour like this by the super rich might have unpleasant consequences for them.
Another problem with giving in on this would be that they will be asking for lower rates.
Again, and again, and again.
It’d be a senseless race to the bottom where the rest of society is run over.
Sure, the tax money still wouldn’t be necessary to fund anything. So “compensating” the loss by raising tax for the rest isn’t necessary.
But for that end politicians would need to understand the monetary system. A thing most of them are weirdly proud not to.
Even an author like Tom Krebs, who promotes a new economic system with planning and creating money, seems to make a somewhat weird difference between financing things by 1. creating money and 2. using tax money.
Its now a daily drumbeat that ‘we cant tax the rich’.<p>
BBC will not engage – even about equalising rates of tax between earned and unearned income, or about withdrawing subsidies form high income pensions<p>
So there is no real debate. The BBC’s own guidelines have said they shouldn’t use the household analogy – but they do every day. They seem to have taken Andy Verity from economics to other matters – and he was the only one prepared to tell economics like it is.<p>
This is Ministry of Truth stuff
You may be right. I looked him to see what he is doing now and found this on wiki
In June 2023, he published his first book, Rigged: The Incredible True Story of Whistleblowers Jailed after Exposing the Rotten Heart of the Financial System. It reveals the cover-up behind the Libor scandal that erupted in 2012.
Obviously too dangerous for some people.
Tax is about sharing the burden of communal facilities and safety net fairly. If you don’t want to be part of a society that wants that, then leave.
We should ensure the tax system is set up to ensure that the money they’re making from the country is properly taxed – looking at reciprocal agreements for minimum tax rates to discourage tax haven seeking, but also shifting profits, etc, so that the companies accruing those profits that are paid out to shareholders are paying their share, too, particularly when they are multi-national.
The government should focus on ensuring its contracts quantify the benefit of sourcing British services and goods over international for government needs, too. This wouldn’t stop them buying off-shored consultancy, etc, but it could ensure that any company paying British taxes on employment and profits have that effective contribution back to the factored in when evaluating which contract gives the government the best value overall.
Almost all my career I’ve paid more in tax than I’ve got out. Success means being able to contribute to raising others up as well as yourself, and tax is just part of that. Many people a lot richer than myself could do with developing a social conscience.
Those who use the company, Hargreaves, might usefully wonder about how much of the fees charged, that they then pay, go into that £210m?
Just a thought …..
Would they like a hand packing?
Can Richard do a video about Burnham’s statement about “not being in hock to the bond market”? Perhaps you have already but it’s clearly a phrase which has caught on since the New Statesman are discussing it again
https://www.youtube.com/watch?v=95rAIe3r-W8
The two presenters are well meaning but they accept the framing that we must cut welfare and we must spend more on “defence”.
Your wish….
https://www.taxresearch.org.uk/Blog/2025/09/27/andy-burnham-vs-the-bond-markets-who-really-runs-britain/#gsc.tab=0
The irony of this is boundless. He made his pile from selling products like ISAs which is basically a subsidy to the wealthy on fealty from our own government.Then uses the vast amount he acquired, courtesy of our governments largesse, to threaten to avoid paying his fair share back into the system. Absolutely bloody infuriating.
Really needs taking down a peg or two the arrogant, greedy,self centred ………*.
* Insert word of choice.