Aarti Joshi: Labour’s taxes are making us all poorer 

Aarti Joshi is a Tax Director at a FinTech. She was a Conservative parliamentary candidate at the 2024 general election.

Whilst Jonathan Reynolds’ recent announcement that Labour won’t introduce a wealth tax might indicate the government hasn’t yet gone full-blown socialist, it proves that they don’t understand that the taxes they’ve already introduced punish the rich, and it’s making us all poorer.

We’ve entered a doom spiral. 

Labour’s backbench MPs, emboldened by their recent victory on the welfare reform bill will push for further tax increases on the ‘wealthy’ at the autumn budget, but these must be resisted by the Treasury, and the Chancellor must go further in ruling out more increases in capital gains tax, employers’ national insurance and further freezes to income tax thresholds. 

The Business Secretary has noted correctly that this Labour government has already increased taxes on ‘wealth’ through changes in inheritance tax and capital gains taxes. 

As a tax specialist, I have seen first-hand the choices that businesses are now making when deciding where to locate and invest, and how many people to employ. It is no coincidence that the KPMG job data survey for May 2025 shows that the number of jobseekers increased at the steepest rate since 2020. It would be madness to further increase employment costs for businesses. This is particularly the case for SMEs; the costs of employing staff are proving a real deterrent to hiring more people, and business growth. 

I have worked for companies where the founders started up their businesses in London very deliberately, making the most of the certain tax environment, incentives and international talent pool. Now, many founders are thinking twice when assessing where to locate their businesses, considering the tax implications of being based in the UK. 

10,800 millionaires left the country in 2024, more than double the number that left in 2023. This Government seems hell bent on ensuring that this exodus becomes a stampede.  Where the UK used to attract international talent, 4,400 business leaders have moved overseas in the last year, according to Bloomberg. We all have successful, high-flying friends who have moved to Dubai, attracted by the low taxes. The Adam Smith Institute reported last week that over a quarter of young Brits are considering leaving the UK. 

The October 2024 budget was a watershed, raising £40bn of taxes through capital gains tax increases, freezes in thresholds for inheritance taxes, increases in tax rates on entrepreneurs disposing of their businesses, and an increase in employer national insurance rates. 

In the likely event that the Chancellor does buckle under political pressure from her backbenchers, the Conservatives must continue to oppose any further increases in capital gains tax and taxes on businesses. 

The Government needs to ensure that the country retains those who contribute most to the public purse. Otherwise, it will be the lowest earners most reliant on public services who will suffer, and the country will take on more debt that it can not afford. 

In Britain, the top one percent of earners pay 30 per cent of all income tax. In a country where public spending has reached almost 45% of national income, Britain cannot afford to lose high earners.

April 2025 saw the increases in employers NI, capital gains tax rates and stamp duty land tax rates take effect, alongside the abolition of the non-dom tax status. As a response to the increase in Employers’ NI, in reality, businesses have put freezes on hiring, and have limited the wage increases they are awarding to existing staff. 

Now, facing a £20bn tax shortfall of her own making, it is all but guaranteed that the Chancellor will come back for more. 

Unless the Labour government revisits its commitment to not increase the headline rates of income tax, VAT and employees national insurance, we are likely to be in for further taxes on capital, high earners, and on businesses. This will impoverish us further, and chase away the very people we need to create and grow the businesses that employ the people that pay the taxes that fund public services. 

Recent data has already shown that the decision to reduce Capital Gains Tax allowances and increase rates has had unintended consequences. 

Capital Gains Tax receipts have fallen starkly, from £17 billion in 2022-23 to £14.5 billion in 2023-24, to £13.1 billion in 2024-25. Rather than raising revenue, these changes have, predictably, changed behaviour and reduced the tax take. More data from the weekend shows that more than £5bn was taken out of pension pots by pensioners in the first quarter of 2025 in the wake of the Chancellor’s inheritance tax raid.   

Further increases in capital gains tax and inheritance tax, or increased taxes on high earners will accelerate capital flight, and the departure of the high earners upon whom a large proportion of the tax take depends.  

This will further undermine the government’s supposed growth agenda, and ensure that it is those most reliant on public services who will suffer, while the debt burden, and future interest burden will grow.

This is something that we as a country cannot afford.