The number of taxpayers liable for the additional rate of income tax is projected to rise from 236,000 in 2010 to 1.7m by 2030, according to analysis by Quilter. HMRC data shows that 1.2m taxpayers will pay the additional rate this year, while the tax office’s internal forecasts show that 1.5m people are expected to be paying the 45p tax rate by 2028. The increases are driven by frozen tax thresholds and inflation, which have pushed many earners into the 45% tax bracket. Calculations from RSM UK show that someone earning £130,000 would pay £44,703 in income tax. If this person were to pay enough into their pension to keep their income below the £100,000 threshold, they would pay £11,271 less in income tax.

The trend of wealthy individuals leaving the UK to escape tax increases is growing, with 3,800 company directors departing last year alone. With this in mind, the Sunday Telegraph‘s Eir Nolsøe looks at jurisdictions where “fleeing the country doesn’t take you out of the taxman’s tentacles,” highlighting that US citizens still face tax obligations even after relocating, with taxes based on citizenship. Martin Portnoy, a tax partner at EY, says: “Once you’re a US citizen, you’re in the club. Once you’re in the club, you’re paying worldwide taxes, wherever you live.” Experts warn that implementing a US-style tax system in the UK could create significant compliance issues and Tim Sarson, UK head of tax policy at KPMG, suggests: “It would be using a sledgehammer to crack a nut, creating a bureaucratic nightmare for lots of people.”

Record numbers of investors are facing dividend tax as they exceed the reduced £500 tax-free allowance. A Freedom of Information request by Quilter reveals that 3.67m individuals are expected to pay dividend tax in the 2024/25 tax year, nearly double the figure from 2022/23. The number of dividend taxpayers rose 1.9m in 2022/23, hitting an estimated 3.08m in 2023/24. The dividend tax-free allowance was reduced from £2,000 to £1,000 in 2023 and halved to just £500 in 2024. Experts say cuts to the tax-free allowance have particularly impacted basic-rate taxpayers. Rachael Griffin, tax expert at Quilter, commented: “The Government has made clear that it expects to raise hundreds of millions in additional revenue from these changes,” with it noted that the tax take is projected to rise significantly in the coming years.

Wealthy parents in the UK are increasingly donating to charity to mitigate inheritance tax (IHT) liabilities. A study by Rathbones shows that 53% of high-net-worth parents, with average assets over £3m, have raised their charitable contributions in the past two years. Gifts to charity are exempt from IHT, and donating at least 10% of an estate to charity reduces the IHT rate from 40% to 36%. Gemma Gooch, head of charities distribution at Rathbones, said: “Our analysis shows many wealthy parents, already concerned about inheritance tax, fear the impact of too big an inheritance on their children’s aspirations and drive. It is, therefore, no surprise that more are increasingly turning their attention to charitable giving.”

HMRC has significantly increased its inheritance tax investigations, according to analysis by NFU Mutual, with the number of cases jumping 41% in 2024/25, from 2,807 to 3,961. HMRC analysis, based on the 2022/23 tax year, shows that 4.62% of UK deaths resulted in an inheritance tax charge, with this up 0.23 percentage points from the 2021/22 tax year. Inheritance tax liabilities reached £6.7bn in 2022/23, marking a 12% increase compared to the previous year.

A report from KPMG and the Recruitment and Employment Confederation shows that July saw a sharp decline in recruitment activity, with the steepest drop in vacancies since April.  Demand for permanent staff was down across all employment categories apart from engineering, with retail at the bottom of the table having seen “a rapid fall in vacancies.” Temporary hiring, meanwhile, fell at its fastest rate in five months. The analysis also shows that pay growth has slowed, with starting salaries rising at the weakest rate since March 2021. Recruiters attributed the slowdown in recruitment to weak confidence in the economic outlook and rising payroll costs. Suggesting that companies are holding out to see what the Budget delivers, Jon Holt, chief executive at KPMG, said: “Many firms will continue to pause major investment decisions until there is greater clarity.”

Research suggests that staff shortages are forcing many Scottish businesses to reduce their opening hours or cut back on services. The Federation of Small Businesses Scotland (FSB) study shows that one in three small businesses are closing early, shutting on certain days or scaling back their operations due to a lack of staff. This comes at a time when the unemployment rate north of the Border stands at 3.7%. Guy Hinks, chair of the FSB, said: “The scale of the issue means it is not just a problem for the individual businesses themselves, it is a drag on the national economy.” Data shows that Scotland has around 350,000 small firms employing over 900,000 people with a combined annual turnover of £93bn.

A poll by the Chartered Management Institute (CMI) shows that around half of managers aged 55 or over think the retirement age should be raised to reflect higher life expectancy, with a third of younger managers agreeing. However, managers polled also flagged the physical strain of certain jobs and noted issues around mental health. CMI chief executive Ann Francke commented: “Getting this right is essential to unlocking productivity and future-proofing our economy. A country that asks citizens to work longer must be a country that values their experience and supports them.”

Manufacturers’ confidence rose to a nine-month high in July, driven by recent tariff agreements, according to BDO’s monthly manufacturing optimism index. The index increased by 2.76 points to 96.50, reflecting reduced concerns over trade, particularly following US President Donald Trump’s decision to lower tariffs on UK car exports from 27.5% to 10%. Scott Knight, head of growth at BDO, said: “Manufacturers may be breathing a little easier… but their output is yet to catch up.” Despite this optimism, challenges remain, including high labour and energy costs. Growth in manufacturing output was offset by Britain’s services sector and with output in the services sector falling to 97.98 last month, BDO’s overall output index fell to 97.79 in July.

A report from the Centre for Social Justice (CSJ) shows that the number of people over 50 who are out of work and claiming benefits has risen by 600,000 to 1.99m since February 2020. The analysis shows that there has been a 21% increase in 50 to 64-year-olds leaving the workforce due to health conditions since 2015. The research also shows that in Q4 2024/25, 93% of the 2.7m people receiving fit notes were deemed “not fit for work”. The CSJ has called for age-specialist careers guidance through the new National Jobs and Careers Service. MP Carolyn Harris, vice chair of the organisation, said the report shows the UK economy “is facing a midlife crisis” and has urged ministers to create a National Work and Health Service.

Rachel Reeves has urged the public to be patient over the Government’s efforts to boost the economy. The Chancellor says her “mission” is to “end the cycle of decline, tackle the unfairness in our economy, give every community the chance to thrive and to make the lives of every working person better off.” She added that while she is “impatient for the change people voted for to be delivered,” she has “always known it was never going to happen overnight.” Saying that Labour is “on the side of working people,” Ms Reeves accused the Conservatives of overseeing “endless spirals of chaos.”

Huw Pill, chief economist at the Bank of England, has warned of an increased risk of “persistent inflation,” despite officials making “progress” in bringing down the rate of price growth. Speaking after the Bank voted to reduce the base interest rate to 4% from 4.25%, Mr Pill said heightened risks regarding inflation could affect the chances of further cuts. He said: “There is some shift in the balance of risks on inflation. There is a risk of spillover into more persistent inflation,” adding: “When inflation is high due to external forces, we need to be aware of the risk they might affect domestic price-setting.” Office for National Statistics data shows that inflation rose to 3.6% in June, far exceeding the Bank’s 2% target.

Antonio Simoes, chief executive of Legal & General, has urged Chancellor Rachel Reeves not to force pension funds to invest in UK assets in a bit to boost economic growth. Saying that ministers should focus on “creating the right conditions” to encourage funds to back the British economy, he argued: “I don’t think we should cross the line of mandating it. I think it’s more about creating the right ecosystem so that it happens naturally.” Mr Simoes says he is “absolutely aligned with the Government’s ambition to promote growth in the UK,” with L&G among firms to have signed a voluntary pledge to invest at least 10% of their pension funds into private markets by 2030, with at least of this 5% earmarked for the UK.

A court has ruled that HMRC must disclose its use of AI in decisions regarding research and development (R&D) tax credits. Tom Elsbury, a tax expert, filed a Freedom of Information request, arguing for transparency. Judge Alexandra Marks at a first-tier tribunal described arguments in favour of greater transparency as “compelling,” ruling that the public deserves to know if AI influences tax decisions. Mr Elsbury has expressed concerns about the implications of AI in tax enquiries, particularly regarding sensitive industries. He argues that the public should know “if AI is concluding or forming a decision in tax enquiries” on enterprise tax credits, adding that people should also know if penalties have been issued on the basis of AI-generated decisions.

With analysis by the Mail on Sunday showing that the pay handed to the FTSE 100’s top executives has exceeded £500m for the first time, the paper’s Patrick Tooher says large salaries and bonuses have prompted a surge in protests by shareholders. Research from Indigo Governance shows that the number of significant shareholder protests has more than doubled so far this year compared with a year ago, with 11 FTSE 100 companies seeing revolts of more than 20%. The largest of these saw almost two-thirds of investors at aerospace firm Melrose reject the pay deal. Mr Tooher says that London-listed companies “increasingly compare themselves with their US peers,” where salaries are higher and bonuses are bigger, but goes on to highlight that many US-based CEOs combine the role with that of chairman, “meaning they have more responsibility – and more pay.”

Big companies are urging investment banks to limit the number of advisers involved in UK takeover deals due to rising concerns about leaks. Recent findings from the Financial Conduct Authority show that nearly 40% of takeovers were reported before official announcements. The UK Takeover Panel is intensifying its efforts to combat information leaks, while companies are increasingly wary of the risks posed by too many insiders having access to sensitive information, with a senior investment banker saying that it is “relatively common to have conversations with anyone involved in a deal about leaks.”

A number of wealthy bankers and City professionals have relocated to Italy to benefit from attractive tax incentives. A scheme which offers reduced tax rates has drawn around 50,000 participants, significantly outpacing the flat-tax initiative. Those moving to southern Italy may pay tax on just 10% of their income, while northern residents pay 30%. However, recent changes have tightened eligibility criteria and increased tax obligations after five years.