When the previous Government introduced the idea of a 50% top tax tier many predicted that all this would achieve would be a mass exodus of the wealthy from UK shores. Indeed in an article of 13 December 2009, the Sunday Times reported that Britain’s financiers and entrepreneurs were quitting the UK at the rate of 10 per week.
It was therefore pleasing to note a recent report in Accountancy Age with the headline “Top tax rate ‘exodus’ fails to materialise”. In various publications over the past few weeks reasons for this lack of exodus have been given as:
• The 50% tax rate was branded as temporary so many decided to ride out its effects
• The tax band actually caught comparatively few taxpayers in its net
• The higher tax rate acted as an incentive to seek ways of mitigating tax
Whatever the reason, the Chancellor, George Osborne, has asked HMRC to analyse the effects of the 50% tax band. Branding it uncompetitive, Mr Osborne went on to say that “There’s not much point in having taxes that are very economically inefficient.”
Certainly, Newshams can see little point in moving abroad to escape the top tax rate when one can implement non-aggressive and yet highly effective tax strategies which mitigate tax at the 50% and even 40% tax rates. Although George Osborne is ”taking very tough action on tax avoidance,” legitimate tax planning strategies can and do reduce tax for higher rate taxpayers; enabling them to stay within the UK and contribute to the economy via their businesses and personal expenditure.
The HMRC review will not be finalised until after the self assessment deadline on 31 January 2012. In the meantime those caught by the higher tax rate may decide to continue to explore tax mitigation techniques in preference to migration.
As tax mitigation specialists Newshams are able to give advice on how tax may affect any private or business transaction and how to put in place an effective mitigation strategy.
Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your tax costs or e-mail us at firstname.lastname@example.org and we’ll get straight back to you.
18th August 2011