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High earners ‘dodge top-rate tax’ with £5bn income shift

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High earning workers will shift about £5bn into the new tax year to take advantage of the cut in top rate tax, the Sunday Times reports.

The top rate of tax for people earning above £150,000 dropped from 50p to 45p on Saturday. The paper said  the movement of funds from one tax year to the next would cost the exchequer about £200m.

The Office for Budget Responsibility (OBR) originally projected high earners would shift £6.2bn of income from 2012-13 into 2013-14 by delaying dividends and bonuses. In last month’s Budget it revised that down by £1.4bn because of lower pay and bonuses, the report said.

However, accountant Grant Thornton said it expected the amount of income shifted would be higher than the original estimate of £6.2bn.

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