No mass exodus for UK wealthy entrepreneurs, research suggests

Fewer of the UK’s leading wealthy entrepreneurs are considering leaving the country despite rising taxes, new research shows.

It had been expected that tax increases for the wealthy introduced earlier this year by the UK government might have led to a rash of investors leaving for locations that are more tax favourable. But research by Investec Specialist Private Bank suggests that this is not as likely as had been predicted.

Research conducted by Investec in May with some of Britain’s most successful entrepreneurs reveals that only 4% are considering dropping their UK residency. In November 2010, the corresponding figure was 16%.

Similarly, in December 2009, only 71% of successful entrepreneurs interviewed by Investec said that they would definitely retain their UK residency, but by May 2011, this had jumped to 88%.

Many of the UK entrepreneurs interviewed feel optimistic about the UK market. Some 42% say that it is very likely that they will launch new companies and products in the UK over the next 12 months, compared to 26% who said this in December 2009.

Some 54% expect the revenue of their UK businesses to increase by 10% or more over the next 12 months, and 26% anticipate that their profitability will rise dramatically during this period, the research also found.

And 68% of leading entrepreneurs interviewed by Investec said that over the next 12 months, they planned to raise external sources of capital for their UK businesses.

Given these growth plans, many of these entrepreneurs will hopefully pick up some of the job losses in the public sector.  Some 68% of successful entrepreneurs interviewed plan to increase the number of people they employ, while only 6% expect this to fall.

‘Much has been written about a potential exodus of Britain’s leading entrepreneurs in the face of rising taxes, but our research suggests that there has been a significant drop in those planning to leave,’ said Investec’s Ed Cottrell.

‘One of the main reasons for this is that many feel that there are a number of attractive business opportunities currently in the UK. Some 54% expect the revenue of their UK businesses to increase by 10% or more over the next 12 months, and 26% anticipate that their profitability will rise dramatically during this period,’ he explained.

He added that this level of optimism helps explain why 68% of leading entrepreneurs interviewed by Investec said that over the next 12 months, they planned to raise external sources of capital for their UK businesses.

Investec Specialist Private Bank is proactively looking to lend more to its core audience of mid-sized companies who wish to raise between £5 million and £50 million to support organic or acquisitive growth strategies.
 
The bank’s integrated finance offering means it is able to create debt structures combining revolving, amortising, senior and mezzanine lines of credit. This includes asset based lending where the bank will provide leverage against receivables, inventory, plant and machinery, property and cashflow/acquisition finance loans.