Key Takeaways
- • Moore Capital is opening an office outside London to enable traders to relocate and avoid the UK's 50% bonus tax on earnings above £150,000, which took effect April 6, 2010.
- • Senior partner Jean-Philippe Blochet and portfolio manager Kornelius Klobucar have departed Moore Capital for lower-tax jurisdictions, representing significant tax revenue loss for London.
- • Alan Howard's Brevan Howard, which manages over £30 billion in assets, established a Geneva office capable of housing approximately 40 employees following the bonus tax implementation, with Howard himself relocating to Switzerland by June 2010.
- • The estimated annual tax revenue loss from Brevan Howard's relocation alone exceeds £350 million, based on conservative salary assumptions of £10 million per employee across 40 staff members plus Howard's minimum £150 million annual earnings.
- • The UK's punitive bonus tax is driving a measurable exodus of high-net-worth financial professionals from London, with hedge fund managers and traders strategically relocating to lower-tax jurisdictions including Switzerland and Geneva.
Summary
The UK's 50% bonus tax, implemented on April 6, 2010, for individuals earning above £150,000 annually, is triggering a significant brain drain and tax revenue loss from London's financial services sector. Moore Capital has joined Brevan Howard in establishing offshore operations specifically designed to accommodate senior traders seeking to escape the levy. The firm confirmed to Bloomberg that two senior traders—Jean-Philippe Blochet, a partner, and Kornelius Klobucar, a portfolio manager—are departing London as a direct result of the tax policy.
The impact extends beyond individual departures. Alan Howard, whose Brevan Howard fund manages in excess of £30 billion, responded to the tax announcement by immediately opening a Geneva office and personally relocated to Switzerland, filing his departure by June 2010. The Geneva operation has capacity for approximately 40 employees, many of whom are expected to relocate. Based on conservative estimates of £10 million average annual compensation per employee across this cohort, the aggregate tax revenue loss from Brevan Howard's relocation alone reaches an estimated £350 million annually—combining the £200 million tax impact from employee bonuses and Howard's minimum £150 million annual earnings.
This exodus reflects a broader pattern of tax-driven migration from London, with hedge fund executives and senior traders strategically relocating to lower-tax jurisdictions. The policy, intended to recapture financial sector bonuses, appears to have achieved the opposite effect: rather than capturing additional tax revenue, it is triggering permanent relocations that eliminate ongoing tax contributions entirely. Moore Capital's decision to establish an external office, coupled with high-profile departures, signals that the bonus tax has shifted from a revenue-generation mechanism to a competitive disadvantage for London as a financial center.
The impact extends beyond individual departures. Alan Howard, whose Brevan Howard fund manages in excess of £30 billion, responded to the tax announcement by immediately opening a Geneva office and personally relocated to Switzerland, filing his departure by June 2010. The Geneva operation has capacity for approximately 40 employees, many of whom are expected to relocate. Based on conservative estimates of £10 million average annual compensation per employee across this cohort, the aggregate tax revenue loss from Brevan Howard's relocation alone reaches an estimated £350 million annually—combining the £200 million tax impact from employee bonuses and Howard's minimum £150 million annual earnings.
This exodus reflects a broader pattern of tax-driven migration from London, with hedge fund executives and senior traders strategically relocating to lower-tax jurisdictions. The policy, intended to recapture financial sector bonuses, appears to have achieved the opposite effect: rather than capturing additional tax revenue, it is triggering permanent relocations that eliminate ongoing tax contributions entirely. Moore Capital's decision to establish an external office, coupled with high-profile departures, signals that the bonus tax has shifted from a revenue-generation mechanism to a competitive disadvantage for London as a financial center.
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