According to the paper, this new mobility would be particularly appealing to wealthier taxpayers, as these highly paid employees are generally more internationally mobile. Many Countries have introduced incentives to attract highly skilled, highly paid remote workers, in terms of taxation and by simplifying procedures for VISA and residence applications.
The majority of UK residents considering relocation are likely to move within the UK. The paper estimates that the number of internationally mobile workers may be between 712,000 and 142,000.
The relocation of such a large number of taxpayers could have the following implications:
- generate an estimated loss of £19bn income tax and £13bn national insurance in the worst case scenario and £3.8bn of income tax and £2.7bn in the lower risk scenario;
- make tax compliance administration more complicated and costly.
Furthermore, the above figures do not include the potential losses in terms of inheritance tax, corporation tax and indirect taxes, if these employees decided to leave the UK permanently.
This analysis should be a wake-up call for the UK Authorities, who should aim to retain highly paid employees and offer incentives to attract international remote workers to become UK resident. The risk for the UK is not only the loss of a significant amount of taxes, but also competitiveness in the medium-long period.
