UK High-Income Earners Voluntarily Take Pay Cuts to “Avoid Tax”! HMRC Cracks Down on Stamp Duty Refunds, Recovering Over £200 Million
- TBA
- 17 hours ago
- 5 min read
UK households urged to consider 25% pay cuts ahead of HMRC punishment
As the issue of high tax burdens imposed by HMRC continues to spark controversy in the UK, a growing number of high-income earners are considering voluntarily cutting their salaries to avoid what they describe as “punitive taxation.” One British pilot has publicly revealed that he chose to take a 25% pay cut in order to avoid facing sharply higher taxes once his income crossed a key threshold.
The 41-year-old pilot, Brown, said that after his annual salary exceeded £100,000, he discovered that more than half of his income was going toward taxes. Under the current tax system, income above £100,000 up to £125,140 is subject to an effective marginal tax rate of 60 pence for every additional £1 earned, resulting in a marginal tax rate as high as 60%.
Speaking in an interview, Brown said: “In my view, anything above a 50% tax rate is a tipping point. You’re giving more than you’re getting back — it feels like being punched in the face.” To avoid this “high-tax trap,” he decided to work only three weeks a month, reducing both his workload and income by 25%, and using the extra time to help his partner, Danisa, run her business.
He was blunt in his criticism, saying the tax policy actually undermines motivation to work. “I’m deliberately limiting my earning potential, paying less tax, and becoming less productive. In the end, everyone loses — individuals, society, and consumers,” he said, calling the policy “fundamentally flawed.”
Brown added that such tax policies actively discourage work. He noted that most people earning close to or around £100,000 do not have the flexibility his job allows. “They either cut back on working hours, curb their career ambitions, or funnel all their income into pensions. Ultimately, the economy loses both their output and the potential growth in tax revenues.”
In the same report, another taxpayer expressed strong dissatisfaction: “If you do an extra £1,000 worth of work and only take home £380, the return is just too low. In that situation, I’d rather work only three or four days a week.” He added sarcastically, “I’ll put my feet up and take the dog for a walk in the woods.”
Analysts say this phenomenon highlights the potential negative impact of the UK’s high-income tax system on work incentives and economic vitality, and has once again reignited widespread debate over tax reform.
HMRC cracks down on “speculative” stamp duty refund claims, recovering an average of £66,000 per case
As HMRC intensifies its crackdown on “speculative” tax refund claims, both the number of investigations and the amount of tax recovered have risen sharply. Notably, the number of homebuyers investigated for underpaying stamp duty doubled last year.
In the 2024/25 tax year, more than 3,000 taxpayers were investigated for allegedly avoiding or underpaying stamp duty. HMRC recovered an average of approximately £66,000 per case, bringing the total amount recovered to around £201 million. By comparison, in the 2023/24 tax year, only 1,617 homebuyers were investigated, with £85.4 million recovered.
HMRC said the sharp increase was largely driven by its targeted scrutiny of stamp duty refund claims. In October 2025, the tax authority publicly warned homebuyers not to trust so-called “no win, no fee” stamp duty refund services promoted by rogue agents on social media.
According to HMRC, in many cases these agents incorrectly tell buyers that properties requiring renovation qualify for lower stamp duty rates. HMRC stressed that such claims are often inaccurate and speculative, and may not only be rejected but also result in higher back taxes and penalties.
HMRC further clarified that even properties requiring substantial renovation may still be classified as residential property and therefore do not qualify for reduced stamp duty rates. A 2024 ruling by the UK Court of Appeal made it clear that unless a property has serious structural safety issues, it should still be regarded as residential—even if it requires a new kitchen or extensive rewiring.
The tightening of stamp duty enforcement has also been linked to a high-profile political case involving former Deputy Prime Minister Angela Rayner. Last year, a media investigation revealed that Rayner had underpaid stamp duty by tens of thousands of pounds when purchasing a flat in Hove, forcing her to resign from her post. Rayner said she had mistakenly believed she qualified for an exemption from the higher stamp duty rate applied to second homes.
Industry experts note that the public attention surrounding Rayner’s case may have prompted HMRC to step up enforcement further, particularly in transactions involving second homes. They expect HMRC to intensify scrutiny of multiple-property purchases going forward.
Every pub in London to get 15% off business rates bill as £300m support package unveiled
Last week, UK Chancellor Rachel Reeves announced that every pub in England will receive a 15% reduction in its business rates bill, with bills effectively frozen at that level for the next two years. Under the £300 million support package for pubs and music venues, pubs are expected to receive around £100 million in additional financial support each year through to 2029.
The relief measures come in response to a business rates increase announced in last year’s Budget. Previously, pubs and music venues were facing sharply higher bills due to a significant rise in rateable values—based on estimated annual market rents—and the removal of a 40% sector-specific relief. Industry groups warned that by 2028, average bills for many pubs could rise by as much as 76%, potentially triggering widespread closures and job losses.
Earlier, amid dissatisfaction with the Autumn Budget, dozens of Labour MPs—including the Chancellor herself—had reportedly been refused entry by pub owners in protest.
However, other parts of the hospitality sector, including restaurants, hotels, and cafés, are not covered by the new relief. These businesses are expected to see their business rates bills rise by an average of 115% over the next three years, reaching approximately £111,300.
Speaking in the House of Commons, Treasury Minister Tomlinson said: “Pubs are the backbone of many communities and play a vital role in our social and cultural life. Given the unique and long-standing challenges faced by the pub sector, we will provide targeted support over the next three years.” He added that the government would further review valuation methods across hotels, retail, and the wider hospitality sector to ensure they more accurately reflect market conditions.
In recent months, several major restaurant groups, including TGI Fridays UK and Leon, have announced insolvency proceedings.
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