Chancellor George Osborne has admitted he was ‘shocked’ by the level of tax avoidance taking place by some of the top earners in the country, after being shown confidential tax returns as part of a study by HMRC.
Studying the anonymous returns, HMRC has reportedly found that wealthiest individuals were using aggressive tax avoidance schemes which meant they paid ‘virtually no income tax’ at a rate of 10 per cent – less than half the level paid by the average earner in the UK.
Talking to The Telegraph, George Osborne said that the findings demonstrated that millionaires should be taxed at a rate equivalent to a third of their earnings, leading to a possible ‘tycoon tax’ in the future.
He said: “I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right.
“I’m talking about people right at the top. I’m talking about people with incomes of many millions of pounds a year. The general principle is that people should pay income tax and that includes people with the highest incomes.”
Although the Chancellor was not given the names of the individuals involved, he admitted that he had met with Inland Revenue and that they are to ‘take action.’
The report allegedly found that 20 of the biggest tax avoiders had used three main tax loopholes to reduce their income tax bill by a total of £145 million in a year, including writing off business losses and offsetting business mortgages against their income tax bill, and also taking advantage of tax breaks on charitable donations.
Speaking in last month’s Budget, the Chancellor described aggressive tax avoidance as ‘morally repugnant’ and that the Government would continue to find ways to tackle it, including a restriction on the amount of tax relief to 25 per cent of an individual’s income or £50,000, whichever is the greater, from next year.
The Government now comes under increasing pressure to publish the personal tax returns of MPs after it pledged ongoing transparency regarding tax affairs.
