20 Mar 2012

No banker exodus after 50p tax rate hike

Channel 4 News learns the number of British bankers leaving the UK for Switzerland fell by 16 per cent in 2011, despite claims the 50p tax rate would encourage wealthy financiers to leave the country.

Graphic showing the number of British bankers who migrated to Switzerland in 2011 (Getty)

Figures obtained by Channel 4 News from the Swiss Federal Migration Office show that just 320 British bankers moved to Switzerland in 2011. In 2010, the figure was 383, making a year-on-year fall of 16.4 per cent.

These numbers will undermine the argument, made by opponents of the 50p rate, that it would encourage bankers to leave the City, with low-tax Switzerland their favoured destination.

The higher rate for those earning £150,000 or more has been one of the biggest issues around Wednesday’s budget, amid widespread speculation that the chancellor will scrap or cut the 50p rate.

The 2011 migration figure largely reverses an increase seen in 2010. However the total is still below the peak of 402, reached the year before the top-rate tax policy was announced.

Hard data on migration to avoid the 50p tax rate is scarce, and Swiss figures analysed by Channel 4 News have been widely quoted by both sides in debates about how the 50p tax rate affects the economy.

In 2010 Vince Cable, then Lib Dem Treasury spokesman, referred to them in the Ask the Chancellors election debate on Channel 4. And the respected Institute for Fiscal Studies think tank quoted our research in chapter nine of its 2012 Green Budget preview book.

These figures do not provide a complete account of migration from London to Switzerland. Many London-based financiers are not British citizens, and so would not appear in these figures.

But there is certainly no evidence to date that the 50p tax rate has prompted a significiant exodus of bankers to Switzerland, as some threatened it would.

The government still has not published a detailed assessment of the amount of money raised by the 50p tax rate since its introduction in 2010.

On 19 March Channel 4 News revealed that a number of big companies had shifted the timing of their dividend payments, with the effect of significantly reducing their shareholders’ tax liabilities under the 50p tax rate.