Remember when the UK imposed a 50% bonus tax at the beginning of this year?
When the UK announced a 50% bonus tax, Alan Howard almost immediately opened an office to allow many of his hedge fund’s, Brevan Howard’s, employees to move out of London to Switzerland.
Now Moore Capital is also opening a new office outside of London, mostly so that traders who don’t want their bonuses cut in half can leave if they want to.
The firm confirmed to Bloomberg that two of their traders are leaving, one of whom is a really big deal for London to lose.
Jean- Philippe Blochet, a senior partner at the firm. The other is Kornelius Klobucar, a portfolio manager. Both traders leaving London just cost the city millions of pounds in taxes.
London will have to add those numbers to the growing amount that high paid individuals are costing the city as they leave for places with lower taxes.
Take the massive exodus of Brevan Howard employees for example.
When the tax went into effect on April 6th requiring anyone earning more than 150,000 pounds to pay 50%, it was almost funny how quickly Alan Howard, whose fund manages more than £30 billion, personally left London for Switzerland.
He filed his departure as soon as June.
The Brevan Howard Geneva office alone can apparently house about 40 employees. So let’s say that, on average, each of those employees earns £10 million (Howard alone earns at least £300 million per year (2% of £30 billion is £600 million), so that’s a fair if not very conservative estimate (another example: Moore Capital star trader, Kaveh Alamouti, 52, took home between £50 million and £75 million in 2007, according to This is Money).
50 per cent of 10 million dollars 40 times over (40 employees) is £200 million, plus Howard’s ~minimum £150 million per year. That’s £350 million, at least.
Now add £50 million for each of the Moore Capital traders now leaving London, assuming both make ~£50 million each.
It hasn’t even been six months since the tax was in place and the city of London alone has lost well over £400 million.