Darling’s 50% tax sends tycoons to Switzerland

That is the news from City tax advisers who say they have never been so busy consulting with professionals on how to leave the UK and avoid their tax bill from Revenue & Customs.

Chancellor Alistair Darling has announced that from next April people paid more than £150,000 a year will pay tax at 50%. But the loss of allowances in reality takes that top tax rate to more than 60% for some.

It makes Britain the highest taxing nation in Europe after the traditionally big income takers of Denmark, Sweden and the Netherlands.

The advent of the 50% tax rate appears to be the final straw for many hedge funds and other money firms who are being actively lobbied by the Swiss authorities to decamp to Zug, Zurich or Geneva.

They are being promised that in Switzerland they can hide from increasing European Union regulation or the intervention of watchdog agencies like Britain's Financial Services Authority.

Richard Jordan a partner at law firm Thomas Eggar told Financial News: "Around 40% of my work involves advising people on ways to leave the country. We have reached a tipping point in terms of hostility to the UK tax system." Financial News estimates that hedge funds managing nearly £10 billion of assets have moved to the tax haven of Switzerland in the past year.

Jordan said the sort of people contacting him are in the same boat as the recent client who complained that the £2.5 million dividend that he is to get paid by his firm will — next year — attract a tax bill of £1.3 million.

"In the past, [hedge fund] managers would say they'd move some operations or dip their toe in the water," said David Butler of hedge fund adviser Kinetic Partners. "Now that has changed."

Fiona Sheffield, a partner in the hedge fund taxation practice at accountant Ernst & Young said: "We have had most of the 250 hedge fund managers we provide services for talking about the pros and cons of leaving the UK for Switzerland."

City big hitters have already started quitting.

Guy Hands, one of the biggest names in UK private equity and head Terra Firma which owns EMI, has already announced he has left to set up home in Guernsey with no intention of returning to Britain any time soon.

Another leading private equity face — John Moulton — has said he could "retreat to an environment of lower taxes, no MEPs and where the most powerful posts in government are filled by election."