The Vanishing Millionaire: A Cautionary Tale for Progressive Britain

The number of millionaires residing in the United Kingdom fell last year to 442,000, the lowest level since the global financial crisis of 2008. This 7 percent decline from 2024, recorded by the Adam Smith Institute's index tracker, is more than a statistical curiosity. It is a signal that demands a serious, nuanced response from the progressive centre-left, not the reflexive glee that some on the left might feel. For The Liberal Current, the question is not whether to celebrate the departure of the wealthy, but how to craft a tax and investment regime that is both fair and economically dynamic.

The drop is attributed to falling asset prices, a low household saving rate, and a well-documented trend of high net-worth individuals leaving the UK or choosing not to relocate here. The Adam Smith Institute, a right-leaning think tank, uses 'constant prices' to adjust for inflation and exchange rates, defining a sterling millionaire as someone with assets exceeding £1 million across real and financial classes, including property, stocks, pensions, and savings.

Why the Decline Matters for Progressive Policy

For liberals who value both individual rights and collective prosperity, the millionaire exodus is a problem. Andrew Griffith, shadow secretary of state for business and trade, argued that 'everyone should care about Britain having fewer millionaires to contribute to the tax pot and creating jobs and businesses here.' While his politics may be unpalatable, his underlying point is structurally sound: wealthy individuals often generate employment, investment, and tax revenue. A progressive Britain should not be hostile to wealth creation, but rather to its hoarding and evasion.

The Adam Smith Institute calls for abolishing inheritance tax, phasing out capital gains tax, and reforming the non-doms regime. These proposals are enormously favourable to wealthy families and would likely reduce government revenue. In 2023-24, the government collected £7.2 billion in inheritance tax, less than 1 percent of total revenue. But by 2025-26, that figure rose to £8.5 billion, and it is forecast to exceed £14.5 billion by 2030-31, driven by frozen thresholds, fiscal drag, and the inclusion of pension pots. A progressive response should not simply dismiss these numbers, but ask: can we achieve a fairer tax system without driving away the very capital that sustains our public services?

The Wealth Tax Debate: A Cautionary Tale

The Adam Smith Institute dismisses wealth taxes as 'particularly misguided,' citing failures in France, Sweden, and the Netherlands where tax take was low and wealthy departures increased. Multiple economists and tax experts agree that a blunt wealth tax is a poor approach. However, this does not mean the left should abandon all efforts to tax extreme wealth. Instead, it suggests the need for smarter, more targeted interventions: closing loopholes, improving international tax cooperation, and ensuring that capital gains are taxed at rates that do not encourage rent-seeking over productive investment.

Mitchell Palmer, an economist at the institute, warned that 'every millionaire that leaves means less capital for British businesses, fewer international connections, and weaker entrepreneurial spirit in the economy.' He argued against 'anti-wealth proposals' like equalising capital gains tax with income tax. A progressive liberal must balance this with the need to fund public goods and reduce inequality. The answer lies not in punitive taxation, but in creating a stable, predictable, and fair fiscal environment that rewards genuine entrepreneurship while curbing excessive accumulation.

What Should a Progressive Government Do?

The government, under Keir Starmer and business secretary Jonathan Reynolds, has not yet commented on these findings. A progressive response should focus on three pillars: first, reforming inheritance tax to target only the very largest estates, exempting family homes and small businesses; second, reviewing capital gains tax to close the gap with income tax for high-frequency traders, while maintaining incentives for long-term investment; and third, strengthening international tax agreements to prevent base erosion and profit shifting by multinationals and wealthy individuals.

The decline in millionaires is not a victory for the left. It is a warning that Britain must remain an attractive place for ambitious people to build and keep their wealth, while ensuring that wealth contributes fairly to the common good. A liberal, progressive Britain can do both, but only if it rejects the simplistic binaries of 'tax the rich' versus 'cut taxes for the wealthy.' The path forward requires nuance, evidence, and a commitment to both economic dynamism and social justice.

FAQ: Understanding the Millionaire Decline

Why did the number of UK millionaires fall?

The decline is due to falling asset prices, a low household saving rate, and high net-worth individuals leaving the UK or choosing not to relocate here, according to the Adam Smith Institute's index tracker.

Is a wealth tax a good idea?

Most economists agree that a blunt wealth tax is problematic, as seen in France, Sweden, and the Netherlands, where it led to low revenue and wealthy departures. Smarter, targeted reforms are preferable.

What should the government do instead?

A progressive government should reform inheritance tax to target only the largest estates, review capital gains tax to close loopholes for high-frequency traders, and strengthen international tax cooperation to prevent evasion.