The Chancellor has told the Daily Telegraph that he was ‘shocked’ to see that some the UK’s wealthiest people have organised their tax affairs, within the law, so that ‘they were regularly paying virtually no income tax’.
‘I don’t think that’s right,’ he said in an interview with the paper. A confidential analysis conducted by HMRC found that multi-millionaires were ‘using aggressive avoidance schemes to reduce their income tax rate to an average of 10%’, the paper reported this morning. The story has already attracted almost 1,000 comments on the Telegraph website.
Budget 2012 announced that from 6 April 2013 the amount of income tax relief individuals can claim will be capped. A consultation document is expected in the summer. Last Thursday HMRC and HM Treasury published a ‘Budget update note’ setting out how the ‘cap on unlimited tax reliefs’ would work. The cap will be set at 25% of income, or £50,000 if greater.
‘[HMRC’s] analysis convinced Mr Osborne that millionaires must pay a minimum rate of tax equivalent to about a third of their earnings, which has been described as a “tycoon tax”,’ the Telegraph reported.
Osborne said: ‘The general principle is that people should pay income tax and that includes people with the highest incomes. I’m not allowed to be shown the names of the individuals but I’ve sat with the most senior people at the Inland Revenue, the people who run some of the high net worth units there. They have given me examples, anonymised examples, and so we are taking action.’
HMRC’s report ‘found that Britain’s 20 biggest tax avoiders have used three main loopholes to legally reduce their their income tax bills by a total of £145m in a year’, the Telegraph reported. Two thirds of them ‘wrote off business losses in one of their companies against their income tax bill, reducing it by as much as half’. Others set off the cost of business or buy-to-let borrowings, or donations to charity.
‘Has Osborne forgotten that Nick Ferguson, by chance new chair of BSkyB, told MPs in 2007 some equity execs were sometimes paying 10% tax?’ asked Laura Kuenssberg, ITV News Business Editor, on Twitter. The Guardian noted last week that Ferguson ‘shot to public attention five years ago when he attacked other buyout barons who "pay less tax than a cleaning lady"’.
Public tax returns
The Telegraph observed that ‘the disclosure that Mr Osborne is now studying individual’s tax returns is likely to add to the pressure on ministers to publish details of their own financial affairs’. The Chancellor had told the paper that he was ‘very happy’ to consider publishing his tax return but the proposal had ‘sparked a Cabinet backlash’.
In yesterday’s Guardian Polly Toynbee called for ‘total tax transparency, so that strident public opinion can help draw the ever-shifting line between what is acceptable and what looks like cheating’.
She added: ‘Taxes are the price we pay for civilisation: soon that price must become a public declaration for all.’
The Chancellor has told the Daily Telegraph that he was ‘shocked’ to see that some the UK’s wealthiest people have organised their tax affairs, within the law, so that ‘they were regularly paying virtually no income tax’.
‘I don’t think that’s right,’ he said in an interview with the paper. A confidential analysis conducted by HMRC found that multi-millionaires were ‘using aggressive avoidance schemes to reduce their income tax rate to an average of 10%’, the paper reported this morning. The story has already attracted almost 1,000 comments on the Telegraph website.
Budget 2012 announced that from 6 April 2013 the amount of income tax relief individuals can claim will be capped. A consultation document is expected in the summer. Last Thursday HMRC and HM Treasury published a ‘Budget update note’ setting out how the ‘cap on unlimited tax reliefs’ would work. The cap will be set at 25% of income, or £50,000 if greater.
‘[HMRC’s] analysis convinced Mr Osborne that millionaires must pay a minimum rate of tax equivalent to about a third of their earnings, which has been described as a “tycoon tax”,’ the Telegraph reported.
Osborne said: ‘The general principle is that people should pay income tax and that includes people with the highest incomes. I’m not allowed to be shown the names of the individuals but I’ve sat with the most senior people at the Inland Revenue, the people who run some of the high net worth units there. They have given me examples, anonymised examples, and so we are taking action.’
HMRC’s report ‘found that Britain’s 20 biggest tax avoiders have used three main loopholes to legally reduce their their income tax bills by a total of £145m in a year’, the Telegraph reported. Two thirds of them ‘wrote off business losses in one of their companies against their income tax bill, reducing it by as much as half’. Others set off the cost of business or buy-to-let borrowings, or donations to charity.
‘Has Osborne forgotten that Nick Ferguson, by chance new chair of BSkyB, told MPs in 2007 some equity execs were sometimes paying 10% tax?’ asked Laura Kuenssberg, ITV News Business Editor, on Twitter. The Guardian noted last week that Ferguson ‘shot to public attention five years ago when he attacked other buyout barons who "pay less tax than a cleaning lady"’.
Public tax returns
The Telegraph observed that ‘the disclosure that Mr Osborne is now studying individual’s tax returns is likely to add to the pressure on ministers to publish details of their own financial affairs’. The Chancellor had told the paper that he was ‘very happy’ to consider publishing his tax return but the proposal had ‘sparked a Cabinet backlash’.
In yesterday’s Guardian Polly Toynbee called for ‘total tax transparency, so that strident public opinion can help draw the ever-shifting line between what is acceptable and what looks like cheating’.
She added: ‘Taxes are the price we pay for civilisation: soon that price must become a public declaration for all.’
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