Will the proposed Wealth taxes drive the rich out of the UK?

There has been much speculation in the press concerning the attractiveness of the UK to overseas entrepreneurs. Last week, the chancellor George Osborne indicated that he would reduce the 50p top rate of tax in order to maintain the UK’s international competitiveness. However, it is not clear how much of an impact such a policy will have on wealth overseas businessmen. Similar concerns were raised several years ago when the £30,000 tax was imposed on the non doms. However, the mass exodus of non doms never did take place in the end as the UK remains a desirable place to both live and do business.

Anyone who is worried that the wealth taxes proposed in this week’s budget and the banker bashing will lead to the wealthy moving overseas to lower tax countries such as Switzerland can take comfort from the fact that Lewis Hamilton has moved to Monaco, the home of his favourite Grand Prix, after deciding Switzerland was too "boring" for him.

Put simply, there are other factors to consider and it is unlikely that there will be a mass exodus of the bankers and other wealthy individuals from the UK to Switzerland anytime soon.

Government Expected to Cut 50p Top Rate of Tax

George Osborne is looking to scrap the 50p top rate of tax in a bid to retain international competitiveness in the UK. The 50p rate was introduced during the end of Gordon Brown’s term under the Labour government and there has been debate as to whether this was a clever ploy to hinder the Conservatives in the event that they won the election.

The Conservatives will be making a bold move should they decide to cut the top rate of tax in spite of growing austerity and unemployment in the UK. The rate is expected to be reduced to 45p rather than being abolished and it is hoped that a reduction in Income tax may provided the necessary stimulus to the British economy. The government are also proposing to increase the Personal Allowance threshold to £10,000 to encourage low income earners into work.

The tax cuts will no doubt require compensating cuts and taxes elsewhere with a new Mansion Tax suggested in the latest proposals.

HMRC Requires VAT to be Paid Online

From 1 April 2012 all VAT registered businesses must submit their VAT returns online and make payments electronically. At present, online registration is required for business with over £100,000 revenue only.