The super-rich who earn more than £1million a year are paying an extra 23 per cent in tax follwing the introduction of the new 50 per cent higher tax rate, according to new research.
Millionaires will be paying an average of £1,010,000 in income tax by 2010/11, compared to £823,000 in tax in 2007/08 – an increase of 23 per cent. This equates to paying an average of 44 per cent of their income in tax compared to 36 per cent in 2007/08.
This compares with a 4 per cent increase in the amount of income tax paid by all taxpayers with the amount of income tax paid by the average taxpayer rising to £5,220 by 2010/11 from £5,010 in 2007/08.
Malcolm Winston, partner at UHY Hacker Young, said: “These figures are quite shocking. They show just how much high earners in the UK are being squeezed. By next year the average millionaire will be paying almost a quarter more in income tax than before the recession – roughly an extra £187,000 each.
“The number of millionaires is projected to fall from 14,000 from 13,000. You have to ask how much of this fall is attributable to the increasing hostility of the UK tax system to high earners, many of whom are highly mobile and would be better off living abroad.
“The 50p tax rate for those earning over £150,000, together with the rise in capital gains tax to 28 per cent, is making the UK increasingly unattractive to high net worth taxpayers.”
According to figures obtained by law firm Wedlake Bell, the number of people declaring themselves non-resident for tax purposes has slumped by 12 per cent in just one year, partly driven by wealthy foreigners withdrawing their investments from the UK.