The UK Government has detailed its pension reform plans, introducing £25bn “megafunds” aimed at enhancing local investments to stimulate economic growth. Chancellor Rachel Reeves said: “These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses.” Seventeen major pension firms have already agreed to these reforms, which include a legislative back-stop to ensure compliance. Zoe Alexander from the Pensions and Lifetime Savings Association noted that the changes could have “significant implications” for pension schemes, while Miles Celic, chief executive of The City UK, supported the initiative’s potential to drive economic growth. The reforms, part of the Pension Schemes Bill, are expected to lead to over £50bn in additional investments in UK infrastructure and businesses, with average earners potentially seeing a £6,000 increase in their pension pots by 2030.

Guillaume Pousaz, the billionaire founder of Checkout.com, has relocated to Monaco to escape the UK Government’s crackdown on non-domiciled individuals. His departure, recorded in Companies House filings, continues a trend of ultra-high net worth individuals leaving Britain for more tax-friendly jurisdictions. Pousaz, valued at £6bn, is the first major fintech entrepreneur to make this move following Chancellor Rachel Reeves’ announcement to abolish the non-dom status, a tax regime that has been in place for 200 years. The Centre for Economics and Business Research has warned that if half of the former non-doms leave, the Treasury could face a £12.2bn fiscal gap.

Tim Sarson, head of tax policy at KPMG, warns that new US tax measures targeting countries with “unfair” tax regimes could significantly impact the UK’s service exports and global tax cooperation under the OECD’s Pillar 2. The proposals, part of the “One Big Beautiful Bill,” aim to impose punitive taxes on companies in jurisdictions the US administration disapproves of. Sarson highlights that the Undertaxed Profits Rule (UTPR) and digital services taxes (DSTs) are particularly concerning, as they could disadvantage UK multinationals in the US market. He notes: “If your country is on the US unfair taxes list and you want to sell services into their market, there’s a tax cost.” The likelihood of these measures becoming law raises fears of a competitive disadvantage for UK firms.

Personal finance experts warn that individuals earning over £200,000 may be under scrutiny from HMRC. In the 2023-24 period, 850,000 individuals, or 2%, were classified as “wealthy” by HMRC, with 395,000 earning above £200,000 and 455,000 holding assets exceeding £2m. Joe Burns from Kreston Reeves stated: “While these campaigns continue, we are now seeing HMRC opening formal compliance checks,” indicating increased scrutiny on pension contributions and property income. Dawn Register from BDO noted the complexity of the UK tax system, which increases the likelihood of errors for wealthy individuals. An HMRC spokesman stressed their commitment to ensuring everyone pays the correct tax, stating: “The Government is delivering the most ambitious ever package to close the tax gap and bring in an extra £7.5bn for public services per year by 2029-30.”

High-net worth individuals are turning their attention to Family Investment Companies (FICs) in an effort to swerve death duties. The vehicle permits a family to pool together assets into a company structure rather than a trust with children effectively gifted assets in the form of company shares. This ensures parents do not give up control of their wealth and keeps them clear of attracting inheritance tax bills. David Denton, of wealth manager Quilter Cheviot, said: “No lifetime inheritance tax charges arise on transferring sums, irrespective of the value transferred. Sums held within the FIC are outside of the founder’s estate for inheritance tax purposes, so provided the founder survives for seven years from creating the FIC, amounts held within it will escape inheritance tax on their death.”

The Migration Advisory Committee has warned that reducing immigrant workers in the engineering and IT sectors could negatively impact the economy and tax revenue. The report contradicts Sir Keir Starmer’s assertion that these sectors are overly reliant on migrant labour, stating that shortages are not as severe as in other areas. The committee highlighted that cutting immigration in these fields would have “negative economic and fiscal impacts” due to the high wages of workers. The Government, however, insists that its “radical skills reforms” will prioritise training for British youth, supported by a £3bn apprenticeships budget.

London has lost its position as the leading global hub for science and technology innovation, according to the latest Smart Centre Index report by consultancy Z/Yen. The capital fell to third place, losing three points, while San Francisco and Zurich gained 16 and 6 points, respectively. The report highlights regulatory environments and taxation as critical issues affecting innovation, with calls for “clear and transparent tax policies.” Despite London’s decline, Oxford has risen to fourth place, while Cambridge has dropped to tenth.

Privacy campaigners are urging the Government to regulate facial recognition technology, citing a report from the Ada Lovelace Institute that highlights “significant gaps and fragmentation across biometrics governance”.

As the Labour Party faces internal strife over proposed cuts to public services, Rachel Reeves’s National Insurance raid has been described as leading Britain into a “doom loop” of increased taxes and diminished growth. In a note published on Wednesday, Moody’s said: “The fiscal headroom remains vulnerable to downward revisions to UK growth forecasts or higher interest rates, which may necessitate new tax measures in the autumn Budget that risk further subduing growth. For example, the Government decision to raise employer National Insurance contributions in the October 2024 budget dented business confidence and will weigh on growth in 2025. Spending pressures have also increased because of geopolitical risks that necessitate higher defence spending.”

In a piece for the Times, Cyrus Kapadia, UK chief executive at Lazard, says Britain’s financial services sector is crucial to its economy, yet it often fails to meet long-term needs. The UK lacks mechanisms like a sovereign wealth fund and has underpowered public investment tools, making it difficult for promising businesses to access necessary capital. Recent improvements, such as a 6% rise in business investment, are encouraging, but more reform is needed. The Financial Conduct Authority’s efforts to reduce red tape are a positive step, but a comprehensive approach is essential for business growth, continues Kapadia, who goes on to stress the need for a “renewed relationship between finance and enterprise” to foster long-term value creation.