Consultation on simplifying employee taxes is welcomed

The ACE Group of Companies is a global insurance and reinsurance group. It is headed by ACE Limited, with a physical presence in 53 countries. If asked whether the Chancellor's announcements on CFC reform and the proposed future reduction of the UK corporation tax rates will cause ACE to consider whether to move its holding company from Switzerland to the UK; the answer is ‘no’ as tax rates are a secondary consideration to the real legal, political, social and economic factors that need to be considered. The current downward trend in the UK corporation tax rates are welcome as tax does feature as an important consideration when looking at where business is located.

 

However, we are a people business and therefore salaries and other employment costs are one of our biggest expenses and the 1% increase in both employees’ and employer’s National Insurance will push our costs up further. We have a global workforce; it is mobile from one country to another. The current 50% rate of personal income tax in the UK is high in comparison with other jurisdictions, and this would discourage senior staff from moving to the UK. The Chancellor's comments that the 50% rate of tax was a ‘temporary’ measure and that there will be consultation with regard to simplifying employee taxes was therefore welcomed. But it was disappointing not to have any indication of how long the 50% rate will remain and the promised consultation is liable to take a number of years.

 

 

Andrew Spry, Head of Tax of ACE European Group