Entrepreneurship in the UK could be under threat by punitive tax measures for high earners announced in the Budget forcing many to move abroad, according to industry commentators.
Martin Bamford, managing director at Informed Choice, says he is concerned today's proposals, which see those earning over £150,000 taxed at 50%, will have an impact on entrepreneurship when the UK needs it the most.
"There is a risk that this is going to kill entrepreneurship in the UK," he says.
"It is going to discourage people in those earning brackets from striving to earn more and effectively pay well over half their earnings to the Treasury.
"Once you have factored in national insurance and no personal allowance it's a high level of income tax," he says.
Bamford also highlights the threat of those earning over £150,000 leaving the UK to work abroad. He says whilst this has often been an empty threat, the higher tax system introduced today could change the situation.
"There are a lot of people earning over £150,000 a year who do have the opportunities to work abroad where they can retain more of the money they work hard to earn," he says.
Carolyn Steppler, associated partner in personal tax at KPMG, agrees the 50% tax rate could drive away high earners.
"From 2010, the UK will have the highest income tax rate among the largest western economies," she says.
"If they are losing half of their top end earnings, entrepreneurs, foreign workers and anyone else who can choose where they work are likely to think twice before making the UK their base."
Steppler says instant post budget reaction already indicates many high earners will be wondering whether to leave the UK.
"With many people likely to see lower incomes this year due to the relative paucity of City bonuses, this measure may prove to be an unattractive headline grabber which does little to actually raise significant funds for the cash-strapped public coffers," she adds.
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