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UK creating fewer millionaires

As increasing numbers of foreign millionaires set up home in London, Britain's wealthy are finding it tougher to get richer as  poor performing investments and the 50% tax rate obstruct wealth creation, it is claimed.

The population of British millionaires increased by 6,000 to 454,000 in 2010. This amounts to growth of a mere 1.4% and is one of the slowest rates among the leading economies, according to a  recent survey by Cap Gemini and Merill Lynch. By contrast, the Germans produced 7% more millionaires last year and increases were reported of 8.3% and 12% in the USA and China respectively.

The figures are a worrying sign for Britain's wealth management sector, whose main clients are the so called "mass affluent" as opposed to super rich. With a more sparse pool of potential clients, wealth managers are increasingly reliant on (a) poaching from each other or (b) refocusing their efforts overseas.

Coutts, the private wealth management division arm of Royal Bank of Scotland (RBS) recently undertook a re-structuring in order to re-balance its mix of clients. This mix re-balance has resulted in a reduction in the proportion of clients from 60% British to approximately 40%.

Adam Horowitz is head  of UK, Ireland and Israel at Merrill Lynch Wealth Management. He puts the poorer growth in millionaire numbers down to the UK's economic problems preventing wealth creation such as rising unemployment and weak house, property and land values.

Mr Horowitz is quoted as saying: "Consumer sentiment is not positive and of course we live with an indebted commercial property sector here in the UK,". Mr Ronnie Ludwig of accountants Messrs Saffery Champness (Private Client Team) is quoted as saying: "It's little wonder when you are looking at some of the highest rates of tax in Europe. We are living in a heavily taxed country". 

The above figures are clearly at odds with the arrival of many super rich foreigners setting up home (particularly) in London but remain not domiciled in the UK for tax purposes. This effectively means their global wealth stays beyond the reach of Her Majesty' Revenue & Customs. Meanwhile, the government is planning to overhaul rules on residency and domicile, charging long-term foreign residents, known as non-doms, more on their overseas wealth, as already reported by St Matthew e-Accounting.

For more information on how St Matthew e-Accounting can help you with you offshore, Non-Domiciled and wealth management requirements please go to www.stmworldwide.com/offshore-solutions or www.stmworldwide.com/non-domiciled-taxation  


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