When Michael Geoghegan moves to Hong Kong in February, the chief executive of HSBC will swap Britain’s increasingly onerous tax regime for one of the most benign in the world. Mr Geoghegan, who earned £1.67 million last year, is not relocating for tax purposes — HSBC has put China at the heart of its strategy — but his move illustrates the disparity between tax regimes for individuals and companies in a mobile, global economy.

Britain comes seventeenth out of 30 key countries for the tax treatment of local managers, according to rankings compiled by Mercer, the consultancy. Hong Kong is second. A married manager with two children pays 26.4 per cent in tax and social security in Britain; the equivalent employee would pay 8.6 per cent in Hong Kong.

The United Arab Emirates comes top of the low-tax and social security rankings, with a rate of 5 per cent for a local manager. Belgium and Denmark are near the bottom, with rates of 38.3 per cent and 40.2 per cent, respectively. Britain ranks behind Switzerland, at No 15, and France, at No 14.

Niklaus Kobel, an analyst at Mercer’s Geneva office, said: “The UK is not like the UAE or Hong Kong, where tax and social security are very low, but at the same time there are places where social security is very high, like Belgium and Denmark, so the UK is in the middle ground.”

Britain is facing pressure from rival jurisdictions, such as Switzerland, that are hoping to lure companies and wealthy individuals that have based themselves in the UK partly for tax reasons. For local employees, the gap between Britain and Switzerland, where managers pay 23.5 per cent in tax, is not that large, but Mr Kobel said that the difference would be greater for expatriate Britons moving to Geneva and would be increasingly pronounced the more they earned.

Companies can make significant gains. Switzerland has the secondlowest corporate tax rate in Western Europe at 21 per cent, behind only the Republic of Ireland with 13 per cent but well ahead of the UK’s 30 per cent rate. In July, McDonald’s became the latest company to announce that it was relocating to Geneva, prompted partly by changes to the taxation of intellectual property in Britain. Its move follows those of other groups, such as Kraft and Informa, the British publisher. WPP, the media and advertising giant, Shire Pharmaceuticals, Beazley, the insurer, and United Business Media have moved to Ireland.

Personal tax changes that take effect in April threaten to make Britain still less attractive for the mobile well-off, for the the top rate for those earning £150,000 or more will rise to 50p from 40p. Someone earning £150,000 will pay an extra £2,603, with the burden increasing steeply with income so that those grossing £225,000 will be £10,103 worse off while someone earning £500,000 will face an additional £37,603, according to figures compiled by KPMG, the accountancy.

Andrew Breach, a consultant at Michael Page, the recruiter, said that most high earners in the City would not move abroad because London was still the place where they needed to be to earn big money — but he added: “Investors who make £1 million-plus are the ones who will think twice and, combined with increased regulation of the hedge fund industry, you might have more people moving to Zurich and Geneva. For people outside the financial sector, there is less need to be here and a director of a pharmaceuticals company can just as easily be based in France as in London.”

The Government is caught between the twin pressures of the need to raise extra tax to shore up the public finances and the fear of scaring away wealthy individuals and companies that have based themselves in the UK. Last year, for example, the Chancellor was forced to water down measures to tighten the tax treatment of non-domiciled UK residents because of concerns about an exodus of wealthy investors and tycoons from London. To Hong Kong, perhaps.

Caught in the middle

• Pound for pound, the biggest losers from next year’s tax increases will not be the super-rich but more than 350,000 taxpayers who earn less than £113,000. Those earning between £100,000 and £112,950 a year will pay 61 per cent tax and National Insurance on that chunk of their income. The freak charge arises because, at just over £100,000, taxpayers lose 50 pence in the pound of their tax-free allowance

• Employees caught by the changes will be the highest marginal taxpayers on that income, while employers will have to pay £289 gross to put £100 net in an employee’s pocket, compared with £191 now, according to KPMG

• Harvey Perkins, associate partner at KPMG, said: “The effect of the gradual withdrawal of the personal allowance for earnings of £100,000 or more creates a bizarre effect. We are talking about people who are reasonably off but not rich.” Mr Perkins said that there had been interest from employers looking at tax-free benefits, such as childcare vouchers, holiday trading and bike-to-work schemes to compensate for the impact of the change.

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