Funding tax reduction

There are some UK taxes that, if lowered, might raise more revenue for the Treasury in the long term, through investment and growth, and by encouraging UK high achievers to stay here, while attracting foreign ones to come here

 A growth-targeted UK tax package would be designed to expand the tax base over time, retain high achievers, attract global talent, and raise long-run Treasury revenue via investment, jobs, and productivity.

 An important step would be to abolish the personal allowance taper between £100,000 and £125,140 so the effective 60 percent band would disappear.  This would remove a distortion that discourages extra work, bonuses, and UK residence for internationally mobile earners. It would simplify the system and remove incentives to avoid income or over-route into pensions solely to escape the spike.

It would cost £5–7 billion in the first year based on number of affected taxpayers and allowance value. But empirical evidence suggests top earners adjust income strongly. Removing a punitive marginal zone is likely to recoup a meaningful share over time through higher taxable earnings, reduced avoidance, and increased retention of high-value workers.

There should be a targeted employer National Insurance holiday for scale-ups and R&D-intensive hires. This would mean zero employer NICs for year one on new hires in qualifying growth firms and R&D-heavy sectors. It would apply per-employee, with perhaps a three-year pilot for evaluation.

Lowering the tax on jobs increases hiring at high-growth employers and strengthens innovation clusters. It would cost £0.5–0.7 billion per 100,000 qualifying new hires, depending on the design. But employment and wages grow the tax base and can generate extra PAYE, VAT, and later Corporation tax. The cost per job is low relative to long-run fiscal returns if growth firms scale up successfully.

The stamp duty on share trading (SDRT) should be abolished for a time-limited trial. The 0.5 percent tax on secondary trading in UK equities should be removed for three years for evaluation. Transaction taxes reduce liquidity, lower equity valuations, and deter listings in the UK. Removing SDRT would deepen capital markets, reduce the cost of capital, and increase future corporate activity and tax receipts.

SDRT revenues in recent years have been around £2–2.5 billion, but there is strong evidence that lower transaction costs increase turnover, listings, and investment. Higher yield from future corporation tax, capital gains tax, PAYE from financial services, and VAT on services could offset a large share over time.

The new Foreign Income and Gains (FIG) regime for job-creating arrivals should be extended. To the new four-year FIG regime should be added a two-year tapered extension for internationally mobile individuals who create a minimum number of UK jobs or make defined qualifying UK investments.

This would compete more effectively with similar regimes in Europe, and reward genuine economic activity in the UK and encourage founders and high-earning executives to move here and stay. The static fiscal effect is small relative to overall non-dom reform yield; maybe a few hundred million per year depending on safeguards and take-up. The dynamic effect would be higher long-run PAYE, VAT, CGT, and investment flows as successful individuals settle, create firms, and generate UK activity.

These measures have an estimated first-year static cost of approximately £8–10 billion assuming typical take-up and scale. But they target taxes with high behavioural sensitivity and high long-run return on the supply-side response. These include elite talent, jobs in scaling firms, financial-market activity, and mobile capital. Over several years, dynamic effects could significantly narrow the net cost, and in strong scenarios, potentially deliver net-positive receipts by expanding the tax base.

 Overall, the result would be to create a smoother marginal tax schedule, lower taxes on hiring in growth firms, internationally competitive treatment for mobile founders and investors, and a deeper capital market to finance UK scale-ups. They would achieve their long-term goal of faster productivity, higher earnings, and a stronger and broader tax base.

Madsen Pirie