UK's Aberdeen reports nearly $7 billion of outflows in first quarter
April 30 (Reuters) - British fund manager Aberdeen (ABDN.L), opens new tab posted first-quarter net outflows of 5.2 billion pounds ($6.96 billion), after just one quarter of net inflows, weighed down by weak markets and a big redemption in its investments division.
The fund manager, which added back dropped vowels to its name in March after a widely-mocked rebrand to ' abrdn ' in 2021, is trying to bolster its finances under CEO Jason Windsor's strategy revamp, after years of tough trading conditions.
Aberdeen's interactive investor division saw a 9% year-on-year increase in customers and offset its quarterly outflows with 1.6 billion pounds of inflows, it said on Wednesday.
The fund manager said its assets under management and administration decreased to 500.1 billion pounds from the 511.4 billion pounds at the end of December. ($1 = 0.7473 pounds)
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Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Winston Churchill was right when in 1906 he said, 'for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle'. Time and again governments have discovered that introducing new taxes or increasing existing ones lead to behavioural changes by those who are liable to pay them. The result is that there is less of what is being taxed and that the revenues are inevitably lower than estimated. It could be Britain's 18th-century window tax, which resulted inevitably in fewer windows – as people bricked them up to cut their tax bill. Or it could be the taxes on candles, tea, hair powder, dog's tails, hearths and bricks. The list goes on. Advertisement Hide Ad Advertisement Hide Ad Then there's the behavioural change that could be the result of forcing Scottish taxpayers earning more than £30,318 to pay more in tax than they would in England. It's no surprise that some Scots have chosen to become English taxpayers, including people working for the Scottish Government or its agencies. Increasing taxes is not the way to create a more prosperous future (Picture: Henry Nicholls) | AFP via Getty Images Budget cuts and higher taxes This is called 'capital flight' and has reportedly led to Scots settling just across the Border and working from home, only occasionally travelling for a meeting in Scotland. Not only do these people take their tax payments elsewhere, it also means they spend more in their new location, depriving Scottish businesses of their economic activity. The SNP has been warned about the impact on countless occasions, including by its own advisors – the result is that tax revenues are inevitably lower than estimated, resulting in unplanned expenditure cuts and higher taxes to make up the difference. Advertisement Hide Ad Advertisement Hide Ad The same phenomenon is now being seen with the UK Government's tax changes for those known as 'non-doms'. The strict definition can be complex but simply put it means people of foreign birth living in the UK but not considered domiciled here because they will eventually return home. Being a non-dom meant you could have a remittance-based tax payment where you would pay British taxes on your earnings within the UK, but not on your earnings outside the UK. For especially wealthy people, often known as ultra-high, net-worth individuals (UHNWIs), this meant they might be paying very large tax bills in the hundreds of thousands (or more) on their UK earnings to our Treasury but also paying taxes in other countries where their overseas earnings were sourced. Millionaires and billionaires leaving Due to proposals first introduced by Conservative Chancellor Jeremy Hunt and confirmed by Labour's Rachel Reeves, the remittance-based tax regime for non-UK-domiciled people was abolished in April. Hunt had said it would raise £2.7 billion additional revenue when he was Chancellor, Reeves predicted £2.6bn and the Office of Budget Responsibility estimated £9bn in the first year and £33.9bn over the Parliament but with a 'very high' uncertainty factor because of the unknown behavioural responses of non-doms. The Institute of Fiscal Studies estimated only £1.8bn. Advertisement Hide Ad Advertisement Hide Ad But taxing for prosperity does not work. In 2024, 10,800 millionaires and 12 billionaires left the UK – taking their direct tax payments, significant investments and economic activity with them. The Centre for Economics and Business Research (CEBR) estimated a loss to Treasury revenues of £12.2bn by 2029, arguing that if 25 per cent of non-doms left the UK, the tax changes would start to cost the Treasury money. Initial estimates put the departures at 10 per cent, but they are continuing to leave at a worrying pace. An Oxford Economics study found that 98 per cent of those studied said that, in reaction to the Tory/Labour proposals, they would leave the UK sooner and 63 per cent said they were planning on leaving within two years. Unsurprisingly, some 83 per cent of non-doms identified liability for inheritance tax on their worldwide assets as a key driver of their decision to emigrate. 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Advertisement Hide Ad Advertisement Hide Ad The principle is similar to tax systems operated in other countries such as Italy and Greece but is a good deal more attractive (cheaper) to the non-doms, and consequently will raise less money for the Treasury. At £25,000 a year compared to €200k in Italy or €100k in Greece, the Britannia Card could be priced higher. Maybe Farage is intentionally pitching it low because so many non-doms will have left that attracting them back in four years' time after a general election will be very difficult. With other attractions that London offers, the cost of attracting UHNWIs could probably start higher and be reduced if it does not work. In an interesting twist, described as making Farage a modern-day Robin Hood, any Britannia Card visa fee income would go straight to the lowest paid as a tax bonus, possibly worth £600 each. 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