US lawyers unite against ‘draconian’ UK Budget
US lawyers hit out last week at the UK Government over the new 50 per cent tax band introduced in the recent Budget.
US lawyers hit out last week at the UK Government over the new 50 per cent tax band introduced in the recent Budget.
US lawyers, some of whom are among the biggest earners in the City, branded the high-earner tax rules as “draconian”.
One US lawyer, who preferred to remain anonymous, labelled the changes as “counterproductive” for London’s position as a world financial centre.
“During a recession high earners are usually asked to pay more tax,” says one US London-based partner. “However, I’m a little surprised with the draconian combination of the increase in top-rate tax, the removal of personal allowances and the reduction of pension relief.”
It is hardly surprising that US lawyers feel penalised. The Lawyer’s Top 30 US Firms in London table (2 March) revealed some of the wealthiest partners in the City, with those at Sullivan & Cromwell topping the list with an average profit per equity partner of $3m (£2.03m).
From next April earners with incomes of more than £100,000 will lose their personal income tax allowance, while those lucky enough to rake in more than £150,000 will be placed in the new 50 per cent tax band.
“Given how dependent London, and the UK economy generally, is on the financial services industry, this seems pretty short-sighted,” says another US partner. “The ultimate impact will depend in part on what happens in other jurisdictions.”
London’s future as a dominant financial centre is already in question.
And it has now become clear that a number of US partners based in the City see the new tax rules as a further threat to the City’s place in the global economy.
“Such a new a regime may force high earners to leave London, with a ripple effect that such an exodus will have on businesses and the housing market,” warns one partner.
The downturn has ripped through global economies, with no sign that the damaging effects will ease off any time soon.
Compounding this, say US practitioners, is the fact that the Budget has failed to offer US lawyers in London any sense of optimism about the future.
