Hartnett: Taxman will target 50% tax rate avoidance

The taxman will crack down on high earners looking to duck the 50% tax rate through avoidance schemes.

Dave Hartnett, HMRC permanent secretary of tax, warned that those switching income tax to capital gains through tax schemes will be kept under "very close scrutiny".

"Where such schemes work technically, we will not hesitate to go to our ministers to ask for a change in legislation," said Hartnett at a meeting in Madrid, reported the FT.

PwC's Jon Terry said some tax planning approaches were likely to be acceptable, if they were genuine commercial arrangements.

A number of potential schemes are mooted. Banks could defer bankers' bonuses, or companies could issue share options that, when triggered, employee could pay income tax on over a long period – potentially at a lower rate of tax if the higher rate was changed.

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