HMRC admit the extent of legitimate tax leakage
Having seen the Chancellor announce the introduction of new 50% (and, in some cases, 60%) tax rates, the Treasury have admitted that legitimate tax avoidance is expected to reduce their impact by nearly 70%.
This would reduce the additional tax collected by something like £2.5billion, annually.
The reduction in tax relief for pension contributions made by those earning £150,000 or more will cut this tax leakage from 2011 on but it seems likely that people taking steps to lessen the impact of the new rates will keep the extra money available to the Treasury to a minimum.
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David Mansell is a Corporate Tax Partner at Mercer & Hole.
Date: 15th May, 2009
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