For those providing services, for example in the knowledge economy, the UK has become a prohibitively expensive country from a tax perspective. The tax regime actively penalises those who contain costs and maximise profit.

Here's how it works.

An information technology company can, with judicious use of outsourced services, operate a sizeable business with remarkably little fixed costs. In fact, taken as a percentage of each sale, it's possible to consider the fixed costs as so small as to be ignored - as is the input tax.

So let's do that. We'll take a single shareholder/director company turning over GBP150,000 per annum. Let's say that a company charges GBP100 for one electronic product.

The first GBP20 goes in Value Added Tax.
The next GBP25 goes in Corporation Tax.
The company distributes its profits by way of dividend.
On this simplistic calculation, that means a distribution of GBP55.

The UK's income tax bands are:

Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £125,140 40%
Additional rate over £125,140 45%
In the case of dividends, this is reduced to

Basic rate 8.75%
Higher rate 33.75%
Additional rate 39.35%

Taking the marginal top rate, that means that of the GBP55 available, a further GBP21.6425 goes in tax, leaving GBP33.36.

But that's not the end of it because every time that business owner spends he pays 20% VAT on his pretty much all his purchases. So his GBP33.36 has spending power of only GBP26.69. If he buys petrol, tobacco or alcohol, there is additional duty, reducing his spending power still further. Even worse: as inflation has increased significantly, VAT's 20% increases with it and hits business owners both with inflation and an increase in the tax paid even though the rate remains the same.

Before you ask, no: the company does not get tax relief on dividends in the way it does on salaries and directors fees.

Is it surprising that so many British business owners who can up sticks and work from somewhere else at beneficial tax rates are doing so?

The higher the profit margin, the more incentive there is to decamp to a less penal tax system.

So who is most likely to move? Anyone in the knowledge economy is the obvious start.

There is one even more startling thing: the UK's maximum personal income tax band at 45% is far from the highest in Europe - but there are plenty that are significantly lower and around the world the rates can fall to as little as a third of the UK rates with the equivalent of VAT in single figures.