GEORGE Osborne is set to step up his attempts to tackle tax avoidance in the Budget on Wednesday, City A.M. understands, as part of a raft of measures designed to prove he is tough on the wealthy.
A Treasury source yesterday said there would be “all sorts of anti avoidance” measures in the Budget including plans to crack down on “disguised remuneration”.
Osborne is expected to target a kind of offshore trust used by some high earners to top up their pensions.
These so-called Employer-Funded Retirement Benefit Schemes (EFRBS) are currently not subject to the same pensions taxation regime as registered schemes, although Osborne is likely to subject them to income tax at 50 per cent.
The chancellor is also expected to announce a fresh assault on non-doms, people who come from overseas and pay UK tax on their UK earnings but no tax on their foreign income.
Currently, non-doms must pay an annual levy of £30,000 after they have lived in the UK for seven years, but Osborne is considering widening the net to include those who have been in the UK for less than seven years.
However, the chancellor is likely to earn plaudits from Britain’s corporates when he unveils plans to reform the regime governing taxation of foreign-earned profits.
He is expected to overhaul the so-called Controlled Foreign Companies (CFCs) regime so that multinational corporations can keep the lion’s share of profits they make overseas.
It would be a huge coup if the chancellor could prove that his reforms of the CFCs system had convinced a multinational that quit the UK in recent years to move back onshore.
WPP, Shire and UBM have left the UK for Ireland in recent years, while plumbers’ merchant Wolseley and Informa went to Switzerland.
Last night, sources close to WPP scotched suggestions that chief executive Martin Sorrell was poised to announce plans to bring the advertising and marketing giant back to British shores.
They argued that there could be nothing in Osborne’s reforms that would hold future governments to maintaining a similar regime.