The tax rate for those earning over £150,000 per year will increase five percent by 2011, raising the rate to 45 per cent.

The increase will affect around 400,000 people and boost government revenue with at least £2 billion a year. But some economists said the move could deter top earners from moving to the UK.

Sean Drury, international mobility partner at professional services firm PricewaterhouseCoopers (PwC), said in an interview with personneltoday.com the increase puts a question mark on the UK's attractiveness as a place to work for resident/non-domiciled executives - particularly those in industries like financial services and technology, which have established industry centres elsewhere around the world.

He predicted many workers in those industries may consider moving to places like Zurich, Dubai, Hong Kong or the US where tax rates are lower. Companies that employ them may start to follow workers to lower tax areas as well.

The UK’s top rate is still comparable to those of other countries in Europe, such as Ireland at 41 per cent, Poland at 40 per cent and Germany at 45 per cent.

The UK’s rate is also similar to the highest tax rates of Australia at 45 per cent, New Zealand at 39 per cent and South Africa at 40 per cent. Denmark has the world’s highest tax rate at 68 per cent.