Treasury revises revenue from 50% rate
Lord Myners reveals revenues from the new higher rate will fail to meet expectations
Treasury
The Treasury is expecting to take much less from the new 50% rate of income
tax than it first estimated, according to Treasury minister Lord Myners.
Speaking in the
House
of Lords yesterday the financial services secretary said the rate would
still be beneficial in terms revenues, but suggested the full extent to which
tax payers would avoid the new rate had not been correctly gauged in advance.
He said the Treasury had: “made adjustments for the behavioural consequences
of a new higher rate of taxation and accordingly have significantly reduced the
anticipated tax take.
He added: “We still believe that it will be beneficial.” He then said the
precision of any estimates “depends on the rates of income of the individual
people who chose to go overseas.”
Lord Myners said: “It is clear to me that very small numbers of people appear
to have gone overseas as a consequence of the increase in the highest rate of
taxation. I remind the House that it applies to less than 2 per cent of the
working population.”
Taxpayers are using a number ofstrategies to avoid the tax. One involves
leaving income within a company to be drawn down later. Others include receiving
pay rises to compensate for the increased rate, moving overseas of chanelling
money through charitable donations.
Read more:
Taxman
to target 50% avoidance