Lightnews — Scholar-powered news

Dan Neidle @danneidle.bsky.social · 1h

And if you like lengthy musings on tax that don't reach any particular conclusion, you can follow me here, or subscribe at taxpolicy.org.uk/subscribe

1 1 20

Dan Neidle @danneidle.bsky.social · 1h

Longer version of this article here: taxpolicy.org.uk/2025/10/11/r...

1 1 10

Dan Neidle @danneidle.bsky.social · 1h

This is a rather boring and defeatist argument for the status quo. That doesn't mean it's wrong.

5 14

Dan Neidle @danneidle.bsky.social · 1h

An exit tax would be a signal that the the UK no longer welcomes entrepreneurs, but seeks to trap them

2 8

Dan Neidle @danneidle.bsky.social · 1h

Those benefits are far more important than a few billion pounds of capital gains tax revenue. Mr Storonsky might not have ever come to the UK if he hadn't viewed the UK as an open economy. There is evidence that "star" inventors' location choices are heavily influenced by top tax rates.

2 8

Dan Neidle @danneidle.bsky.social · 1h

Take 3: losing entrepreneurs is a price worth paying

i.e.: it's a shame that Mr Storonsky has left the UK, but he created a valuable UK business, and that greatly benefits the UK in terms of economic growth, jobs, and the service Revolut provides its customers.

1 2 10

Dan Neidle @danneidle.bsky.social · 1h

- And implementing an exit tax is a high risk endeavour. If the belief takes hold that the Government will introduce an exit tax then people will leave before the exit tax bites; even speculation about exit taxes can be economically damaging.

1 9

Dan Neidle @danneidle.bsky.social · 1h

A more subtle effect: an entrepreneur who started a business in the UK would have a powerful incentive to leave at an earlier stage, before an exit tax had much to bite on.

This is much more compelling to me - but I'm not aware of evidence.

1 9

Dan Neidle @danneidle.bsky.social · 1h

But there are obvious counter-arguments:

People (like Mr Storonsky) would be less willing to come to the UK if we have an exit tax. It's the most obvious argument, but the evidence entrepreneurs and company formation is affected by CGT is weak.

1 12

Dan Neidle @danneidle.bsky.social · 1h

Every developed country in the world has an "exit tax" - you leave with unrealised capital gains, and you're taxed on them.

Except the UK and Italy:

1 4 18

Dan Neidle @danneidle.bsky.social · 1h

This argument goes: it's unfair that someone can build a valuable business in the UK, leave the UK, and then never pay tax on gains they generated whenin the UK.

It's also weird for our CGT tax system to actively encourage wealthy people to leave.

1 13

Dan Neidle @danneidle.bsky.social · 1h

Take 2: This shows we should change the law and tax exits

1 9

Dan Neidle @danneidle.bsky.social · 1h

So we're uncompetitive with the UAE on capital gains tax, and that's irrelevant, 'cause we can't do anything about it.

We can (and do) compete on other stuff.

1 15

Dan Neidle @danneidle.bsky.social · 1h

So that's a static cost of perhaps £30bn. The real cost would be less, as the abolition of CGT spurred investment - but the evidence suggests this effect would be limited (see www.oecd.org/content/dam/... and more sources in the full article)

1 13

Dan Neidle @danneidle.bsky.social · 1h

Capital gains tax is expected to raise £20bn in 2027/28. If CGT didn't exist, people would play games to turn income into untaxed gains - costing another £3bn to £12bn in lost income tax.

The Beatles did this in the 1960s. www.bbc.co.uk/programmes/m...

1 19

Dan Neidle @danneidle.bsky.social · 1h

It's irrelevant because no large developed economy has zero income tax or zero CGT - it can't be done. It's a proposition only a small island or an oil-rich city-state like Dubai can offer.

1 1 18

Dan Neidle @danneidle.bsky.social · 1h

It's true because, for someone expecting to make a large capital gain, or receive large dividends, the UK is completely uncompetitive vs the UAE and other countries that have zero capital gains tax and/or zero income tax.

1 14

Dan Neidle @danneidle.bsky.social · 1h

Take 1: this shows the UK is not competitive

This is true, but irrelevant.

2 16

Dan Neidle @danneidle.bsky.social · 1h

The question is how we should think about this, and whether we should change our tax policy - either reducing tax to convince people like Mr Storonsky to stay, or creating exit taxes to make it more expensive for them to leave.

I have three different takes.

1 14

Dan Neidle @danneidle.bsky.social · 1h

Revolut is expected to list for around £55bn. Mr Storonsky owns about 25% of the business - so his stake is worth about £14bn.

The UAE has no capital gains tax or income tax. So Mr Storonsky has plausibly saved over £3bn by leaving the UK.

1 2 15

Dan Neidle @danneidle.bsky.social · 1h

Nik Storonsky, the founder of Revolut, updated a Companies House entry to show his residence shifting from the UK to the United Arab Emirates.

1 10

Dan Neidle @danneidle.bsky.social · 1h

There's a longer version of this thread here: taxpolicy.org.uk/2025/10/11/r..., with links to all sources.

1 1 8

Dan Neidle @danneidle.bsky.social · 1h

Nik Storonsky, the founder of Revolut, has left the UK and become tax resident in Dubai - escaping more than £3bn of UK tax.

Could we have stopped him leaving? Either with the carrot of a more competitive tax system, or the stick of an exit tax?

Some thoughts:

14 20 72

Dan Neidle @danneidle.bsky.social · 21h

Did ZLX go further, and invent fake research for Dundee United? And was the club stupid enough to claim for it?

I don't know, and Mr McCallion won't say.

But if they did, that's potentially tax fraud.

I hope HMRC is investigating.

1 23

Dan Neidle @danneidle.bsky.social · 21h

The judgment in the fridge case showed ZLX coming perilously close to tax fraud: "documents concocted to present the appearance of industry"

But the wholesaler was smart, and didn't proceed.

1 18