Accountants warn of 50% tax exodus By Ellen Kelleher Financial Times Published: September 18 2009 23:28
A raft of entrepreneurs and financiers are contemplating moving abroad for fear that the planned rise in the top income tax rate to 50 per cent could dent their earnings severely, accountants claim.
The tax rise, set for April, coupled with new rules limiting the tax relief on pensions to £30,000 and scrapping personal allowances for UK residents earning more than £100,000, is encouraging more wealthy Britons to consider following the lead of Sir Philip Green, owner of Arcadia Group, and the investor Guy Hands in relocating to Monaco, Guernsey or Switzerland.
The accountants warn that financial firms in the City are likely to suffer if the movement reaches a crescendo and there is a wider migration of talent.
Leonie Kerswill, partner with PwC, said that a number of her clients were considering moving temporarily for a minimum of two years, in the hope that the tax rate would be lowered. ?Most people think this ra te won?t last and it will eventually return to 40 per cent if there is a change in either the government or economic conditions, so they are considering temporary moves,? Ms Kerswill said.
Chris Sanger, head of tax policy with Ernst?&?Young, claims interest levels are highest among those with jobs that allow them some mobility. ?Asset managers are able to operate from anywhere in the world,? he said. ?And the question a lot of people are aski ng is whether the UK will become an outlier with a 50 per cent tax rate in place. We?re seeing a lot of interest from clients who are contemplating moving.?
Mike Warburton, tax director with Grant Thornton, believes the upswing in interest in leaving the UK is cause for concern.
?The government may be pretending it?s not happening, but t hey have to wake up and get real,? he said.