Bank catering to the ultra-wealthy cautions Reeves about potential entrepreneur departures

Concerns Grow Over UK Investment Climate

Rachel Reeves has instructed Treasury officials to investigate the extent to which investors are departing the UK.

A prominent private bank has cautioned that the current tax burden and regulatory environment are making the UK an increasingly unattractive destination for investment, prompting many business leaders to relocate abroad.

Lombard Odier, a wealth manager serving high-net-worth clients, recently contacted Rachel Reeves to express growing dissatisfaction among investors regarding government policy.

The bank, which has operated for over two centuries, pointed to recent increases in employer National Insurance, new employment legislation, and adjustments to business rates as factors causing clients to perceive the government as hostile to business growth.

Following the latest Budget, several well-known entrepreneurs have opted to move to low-tax jurisdictions such as Dubai.

Lombard Odier also noted that these tax changes have been exacerbated by a pervasive lack of entrepreneurial spirit and a negative outlook within the UK investment community.

According to the bank, there is a prevailing sentiment that wealth creation is viewed with suspicion, which has contributed to a cautious investment culture.

Many entrepreneurs have found it extremely challenging to secure funding from UK investors, leading them to seek capital overseas.

Lombard Odier submitted these concerns as part of a Treasury inquiry launched last year, which aims to address the increasing trend of entrepreneurs relocating their businesses abroad in search of better opportunities.

Ms Reeves has asked Treasury staff to assess the number of investors leaving the country and is also reviewing her decision to eliminate the non-dom tax regime.

To help stem the outflow of wealth, Mark Goddard, Lombard Odier’s UK CEO, has recommended that the Treasury release £350 billion from cash ISAs to support start-up investment.

Improving Financial Literacy

Mr Goddard has also proposed the introduction of a special investor visa, contingent on investment in UK venture capital and private enterprises. He emphasized the importance of enhancing financial education to encourage greater investment activity.

He stated, "Financial literacy, investment, and entrepreneurship should be more strongly promoted within the education system to nurture the next generation of UK businesses."

Despite these recommendations, the upcoming Spring Statement from the Chancellor is unlikely to feature new tax incentives for business owners, as the government aims to maintain a low-key approach to restore stability and confidence.

Lombard Odier, headquartered in Switzerland, has operated in London for over five decades and specializes in managing assets for start-up founders, overseeing £215 billion globally.

Entrepreneurs Consider Leaving the UK

Earlier this year, Mr Goddard attended discussions at the Treasury regarding the departure of wealthy individuals. To inform the bank’s recent correspondence with the Chancellor, he hosted a dinner with eight entrepreneurs—six of whom indicated they were contemplating leaving the UK.

Mr Goddard observed, "There is a steady but determined movement of talent and capital out of the country."

He warned that when these individuals depart, they take with them not only their wealth but also their expertise, future tax contributions, and willingness to mentor and invest in emerging British businesses.

Technology entrepreneur Herman Narula, valued at over £700 million, announced last year his intention to move to Dubai, citing dissatisfaction with government policy. Similarly, billionaire steel tycoon Lakshmi Mittal reportedly shifted his tax residency from the UK to Switzerland, spending much of his time in Dubai.

In its submission to the Treasury, Lombard Odier highlighted significant challenges in scaling businesses within the UK and Europe, noting that some entrepreneurs have had to raise substantial funds abroad after being deemed too risky for state support.

Clients have consistently voiced concerns about unpredictable tax policies, with the bank noting that "actions speak louder than words."

Government Response

A Treasury spokesperson responded, "In a world marked by uncertainty, Britain remains a stable, open economy governed by the rule of law. With £10 trillion in capital and a globally competitive tax system—including the lowest main rate of capital gains tax among the European G7 and doubled tax reliefs for entrepreneurs—the UK continues to be an appealing destination for talented individuals to live, invest, and do business."