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Not as many traders as feared will leave Britain following the top tax rate rise next month, the boss of broker Tullett Prebon said today.
Terry Smith, chief executive of the world's second largest inter-dealer broker, expects some of his staff to leave but said a lot were dissuaded by the difficulty of relocating before 6 April, when the 50% tax rate is introduced.
“There's at least another month's work to go on people moving overseas,” he said.
“It's not any easy matter. People are looking at having to get rid of houses in this country and accept that they won't be coming back to visit their families.
“Her Majesty's Revenue & Customs has also got tough making it clear that people who move must have a foreign contract and that they cannot come back to the UK for business purposes. Despite that some of our people are still interested.”
Tullett was the first major London financial firm to go public with its intentions when in December it said it would help any of its 800 employees in the capital move to Switzerland, Singapore or the US to avoid the 50% top rate.
Smith said last year produced a “reasonably good set of figures” for Tullett with revenues virtually unchanged at £948 million with pre-tax profits 1% higher at £157 million.
This was despite the defection of 77 staff to rival BCG in the US with other poaching in London and Hong Kong. Smith said the departures accounted for 6% of the firm's revenues. He is taking legal action in all three countries with the London court ruling likely in the next week.
For the first two months of the year revenues are running 5% lower than a year ago but Smith expects this to improve, particularly during the second half, and as the defectors are replaced.
He is also less worried than some in his world about the threat to business posed by regulators forcing banks either to split off their proprietary trading arms or, at least, put up greater capital to back risk taking.
“We are two and half years into this whole business of tighter regulation and nothing much has happened yet,” he said.
“I suspect not much will happen in the future. It requires a degree of clear thinking and international co-operation that I have not seen as yet.”
The dividend for the year goes up 18% to 15p a share.
Reader views (7)
Can you not work out that if the really talented, who I would assume would be the best paid move, then the work will move with them.
2 years ago must top football players were moving to the UK, now they are going to Spain, where the tax rates are much more benificial.
As I understand it you can negoiate with the Swiss as to what tax you will pay. so they are not going to be easy to compete with.
Ronald Reagan inherited a huge deficit problem when he became president of the USA, and shocked all his experts who advised him to put taxes up, when he lowered taxes, the USA had a record atx take that year, because lots more people paid instaed of fiddling.
- Steve M, London, 09/03/2010 00:22
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Elizabeth, in this day and age taking one's career seriously often means relocation. In Zug career opportunities are excellent, personal security is very good, education for children is thorough / of a high quality. The pay is not bad too
- Coys Switz, switzerland, 08/03/2010 16:36
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Figures gathered by Channel 4 news showed that in 2009 there was actually a fall of 7% in the numbers of British people applying for permits to work in Switzerland.
I've never understood what kind of person would be willing to leave their family behind (or uproot them) to move to Zug or Jersey in order to avoid paying tax! Talk about getting your priorities wrong.
- Elizabeth, London, 08/03/2010 16:12
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Terry Smith should just check where financial institutions are recruiting to see where firms are moving... and it's not London, I'm afraid, like it or not most people will have to leave (even if, on balance, for many it won't be as beneficial as it might look). I find Terry's comments a bit silly, pretending that all is well doesn't make the problems go away
- Mandingo, London, 08/03/2010 15:55
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Who gives a monkey's?
I don't doubt for one second there's a whole new generation of brilliant young graduates, hungry to take these jobs at a fraction of the salaries of the overpaid, overrated incumbents!
Investment bankers aren't rocket scientists, -they're only glorified gamblers!
- Huggy, Cumbernauld Scotland, 08/03/2010 15:19
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I wish you were right Mickinlondon, london. I live in Zug, Switzerland and testify many many new Brits incoming here.
- Coys Switz, switzerland, 08/03/2010 14:49
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Quote: “It's not any easy matter. People are looking at having to get rid of houses in this country and accept that they won't be coming back to visit their families.
If they go, why would they want to come back, or even be allowed back?
Plus they could give their houses to the homeless free of charge?
Quote: “We are two and half years into this whole business of tighter regulation and nothing much has happened yet,” he said.
And nothing much will happen in the next two and a half years, or the next two and a half years after that.
Quote: For the first two months of the year revenues are running 5% lower than a year ago but Smith expects this to improve, particularly during the second half, and as the defectors are replaced.
So those defectors can be replaced then? So why are we bothered about the defectors at all?
Reading between the lines we can all see that threats to leave the city, are just threats by those that will be replaced anyway?
- Mickinlondon, london, 08/03/2010 13:58
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