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The chief executive of Canada’s largest bank has warned the UK government against introducing a new wealth tax, saying it would compound the exodus of rich people from the country following the abolition of the non-dom regime.
Dave McKay, the boss of Royal Bank of Canada, which has a large wealth management business in the UK, said that increasing the tax burden on the wealthy would “100 per cent” result in people leaving for “a lower tax jurisdiction”.
“If you put in place a 2 per cent asset tax, which is what’s being rumoured, that’s a lot. People would seek out other markets,” McKay said in an interview with the Financial Times.
His comments came after Downing Street last week refused to rule out raising taxes on wealthy individuals in the autumn Budget, as chancellor Rachel Reeves looks for ways to fill a hole in the public finances following the government’s recent £5bn retreat on welfare reforms.
The chief executive of RBC, which bought UK wealth manager Brewin Dolphin in 2022 and has about £108bn in assets under administration at its British unit, also said a new asset tax would threaten to undermine efforts to boost the UK’s stagnant economy. His comments came as Reeves this week laid out plans to reduce regulation of business to boost economic growth.
“You cannot afford to scare capital away . . . [the UK] talks about trying to get rid of red tape, why would you shoot yourself in the foot and go through all that effort to cut red tape only to put an asset tax on?”
McKay added that Reeves’ tightening of non-dom tax rules had already “caused wealth to exit”.
The Labour administration this year abolished the non-dom regime, which had allowed British residents who declared their permanent home as being overseas to avoid paying UK tax on foreign income and gains.
Under the changes, non-doms who stay in the UK could also see their worldwide assets subject to UK inheritance tax at 40 per cent.
“There are a number of clients who don’t want to leave — who are great contributors here to society — but they have to leave because of the tax burden,” McKay said. “Forget the wealth tax, this is just the non-dom issue.”
McKay, who has run RBC since 2014, also said that the Canadian bank had seen a “significant amount of client activity and diversification” out of US assets and into European investments since US President Donald Trump announced a raft of “reciprocal” tariffs in early April.
He said this represented an opportunity for the UK to attract foreign capital, but added that the Labour government risked thwarting this opportunity with some of its policy choices.
“You’re seeing Americans wanting to diversify and move their assets [to the UK], but at the same time you’re seeing this [non-dom] tax issue . . . it’s interesting because the UK could’ve attracted a lot more capital from the US.”
Despite his concerns about the non-dom tax changes and a potential asset tax, McKay said the UK remained an attractive market for RBC. “Overall, the demographics are right. It hasn’t been the largest growth market, but it’s been a healthy market for us. There’s upside.”
