C_J Cutting the top rate of tax and lifting the cap on bankers bonuses is probably a good thing in my view. I think it probably encourages more big hitters to pay tax and do business here
I don’t buy this. Firstly, there’s a massive difference between someone earning £150-£200k, and a banker pulling in a £1.5m bonus. The marginal difference between a 40 and 45% tax rate on earnings over £150k IMO isn’t enough to change the taxation behaviour of the majority in that bracket. I’m one of them, and for me it’s gonna mean an extra £1,500 in my pocket next year. That’s hardly the difference between retiring to Mustique and slumming it in Brighton for another year. It’s a few nice meals out / a bit extra in my pension pot etc etc. Welcome, but unnecessary.
For those where it makes a much, much more substantial difference in their taxation, I still don’t buy that it’s enough to change where they domicile for tax reasons, or methods they use to reduce their tax burden. If you’re a banker on a total of £2m a year, the 45% top rate means a top rate tax liability of £832,500. With the eradication of that rate, it reduces it to £740,000, so a not insubstantial £92,500 gap. BUT - these people are already balls deep in tax avoidance schemes. Reducing a wealthy banker’s tax liability to ‘only’ three quarters of a million of top rate tax is not gonna change their attitude to taxation one iota…
