Posted by Tax Innovations on 05 Oct 2011
UK is 4th Highest EU Tax Payer
According to figures from KPMG, Britain’s top earners are faced with the fourth highest income tax rate in the EU.
The UK places joint 4th in the high tax league, with Denmark, Sweden and the Netherlands the only three EU countries to rank higher.
The higher earner tax rate of 50p was introduced by the last Labour Government, as a means of addressing the perceived financial and social imbalances across the UK.
Many however saw it as at a politically motivated policy rather than one of a deficit reduction nature, with the Institute of Fiscal Studies reporting earlier this month that it is “not clear” if the 50p rate will raise any revenue for the Treasury.
The wealth of tax planning solutions available to those on higher incomes is supportive of this view and bespoke tax planning can enable a high net earner to reduce the impact of the 50p additional tax rate whilst continuing to enjoy the fruits of their labour.
Enterprise Investment/Venture Capital Trust Schemes
For example, tax reliefs available through pension planning and Enterprise Investment/Venture Capital Trust schemes can aid long term strategies and combined with the benefits of offshore tax structures and the comparatively easy implementation of such planning, it is easy to see why the the 50p tax rate is seen more as a headline grabbing inconvenience than a clever deficit reduction strategy.
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