Britain will lose hundreds of millions of pounds in tax revenues every year as a result of top hedge fund managers moving overseas, with the departure of just two to Switzerland estimated to cost the Treasury more than £200m. So far only a handful of hedge fund partnerships have moved their headquarters offshore but a far greater number of individual employees than previously acknowledged have moved to subsidiary offices abroad. One in four hedge fund employees have left London to move to Switzerland, where the tax regime is considered more stable, according to the consultancy Kinetic partners. The cost to the Revenue is difficult to calculate but based on a conservative 28 per cent tax rate paid by the 1,000 or so hedge fund managers that Kinetic said had left, the UK will have forgone nearly £500m in taxes, although it could be much more. The average City hedge fund manager earns about £1.5m-£2m a year. While some had structured their incomes to pay tax at the 28 per cent corporate rate, many paid much more.
Monday, October 04, 2010
Tax rates do matter. Quite a bit: