How the very rich respond to tax increases

The 50p tax on earnings over £150,000 was introduced as a temporary measure under the previous Labour government. It currently affects about 320,000 people, or 1% of taxpayers, according to HM Revenue & Customs. But the IFS said today there will inevitably be an upswing in what it calls "avoidance activity" as high-earning individuals search for ways to mitigate the impact of the tax. While there are a number of things individuals can do to avoid paying it, some, such as doing fewer hours of paid work or moving abroad, involve a real reduction in income. Others, it outlined, do ...