KPMG has noted that only 13% of respondents in a survey of large businesses operating in the UK said the 50% rate of income tax was proving a barrier to attracting senior talent, compared to 80% who anticipated difficulty when asked in 2009.
An estimated 308,000 taxpayers are liable to pay the 50% rate in 2011/12, David Gauke, the Exchequer Secretary to the Treasury, said in a Commons written answer yesterday.
Chris Morgan, Head of Tax Policy at KPMG in the UK, said the effect of the 50% rate ‘on the ground’ was relatively minor, due to businesses using ‘tax equalisation’ to compensate for its impact.
But that ‘bare statistic’ did not tell the whole story, he added. ‘Such a dramatic change of sentiment warranted further investigation so we returned to some of these respondents and found that the message is quite subtle.
‘Our sample feels that [the 50p rate] sends a message that the UK is not necessarily as “open for business” as might be hoped. Business is looking for reassurance that this top rate will indeed be only temporary.’
Earlier this week the Centre for Economics and Business Research claimed that the UK had ‘lost its place an attractive, low-tax jurisdiction that welcomes wealth-creators’ and had become ‘one of the most punitive’.
‘There is a danger that the 50p tax – combined with higher NICs and VAT, and restrictions on pensions – pushes British taxes over an important psychological threshold that breaks the covenant that wealth-creators feel towards their domestic tax regime,’ the CEBR said.
The Chancellor asked HMRC earlier this year to assess the impact of the 50% rate.
‘HMRC will consider all available evidence around the impact of the 50% rate including data from the 2010/11 self-assessment returns which will become available next year, David Gauke said in September.
‘The Chancellor also made clear in his Budget 2011 speech that the 50% rate is a temporary measure. In an age when businesses, capital and people are increasingly mobile, high tax rates send a negative signal to those looking to work and invest in the UK,’ he told MPs.
KPMG has noted that only 13% of respondents in a survey of large businesses operating in the UK said the 50% rate of income tax was proving a barrier to attracting senior talent, compared to 80% who anticipated difficulty when asked in 2009.
An estimated 308,000 taxpayers are liable to pay the 50% rate in 2011/12, David Gauke, the Exchequer Secretary to the Treasury, said in a Commons written answer yesterday.
Chris Morgan, Head of Tax Policy at KPMG in the UK, said the effect of the 50% rate ‘on the ground’ was relatively minor, due to businesses using ‘tax equalisation’ to compensate for its impact.
But that ‘bare statistic’ did not tell the whole story, he added. ‘Such a dramatic change of sentiment warranted further investigation so we returned to some of these respondents and found that the message is quite subtle.
‘Our sample feels that [the 50p rate] sends a message that the UK is not necessarily as “open for business” as might be hoped. Business is looking for reassurance that this top rate will indeed be only temporary.’
Earlier this week the Centre for Economics and Business Research claimed that the UK had ‘lost its place an attractive, low-tax jurisdiction that welcomes wealth-creators’ and had become ‘one of the most punitive’.
‘There is a danger that the 50p tax – combined with higher NICs and VAT, and restrictions on pensions – pushes British taxes over an important psychological threshold that breaks the covenant that wealth-creators feel towards their domestic tax regime,’ the CEBR said.
The Chancellor asked HMRC earlier this year to assess the impact of the 50% rate.
‘HMRC will consider all available evidence around the impact of the 50% rate including data from the 2010/11 self-assessment returns which will become available next year, David Gauke said in September.
‘The Chancellor also made clear in his Budget 2011 speech that the 50% rate is a temporary measure. In an age when businesses, capital and people are increasingly mobile, high tax rates send a negative signal to those looking to work and invest in the UK,’ he told MPs.
