Revealed: the budget bonanza for UK’s best-paid bosses from Tory tax cut

The abolition of the 45p top rate of tax will deliver millions of pounds in savings for Britain’s best-paid bosses, including those in charge of energy firms benefiting from high domestic gas and electricity prices, Observer analysis shows.

Likely beneficiaries range from Britain’s best-paid woman, Bet365 chief executive Denise Coates, who could save £20m, to the boss of pharmaceuticals giant AstraZeneca.

The tax cut also spells sizeable benefits for the bosses of oil and gas firms BP and Shell, which have posted record profits as a result of the high wholesale prices that have left the poorest households facing a choice between heating and eating.

Chancellor Kwasi Kwarteng announced surprise plans to cut the top rate from 45p to 40p during his “mini-Budget” on Friday, with the cut taking effect in 2023. If the new top rate had been in place when they pocketed their most recent pay deals, the average FTSE100 boss would have saved £162,500 a year, based on median earnings of £3.4m in 2021.

Pay disclosures by some of Britain’s biggest companies show that some directors stand to enjoy much greater benefits. Bernard Looney, the BP boss who has said that sky-high oil prices have turned his company into a “cash machine”, was paid £4.46m in 2021, the last year for which figures are available. Were those pay deals to be repeated in 2023, the Tory government’s abolition of the 45p-in-the-pound rate would be worth £215,500 to him, and a further £112,500 to chief financial officer Murray Auchincloss, based on his £2.4m deal. Shell’s executive directors, including chief executive Ben van Beurden, stand to benefit to the tune of £542,500, while British Gas owner Centrica’s top three earners could save a combined £73,500.

Across a group of other energy producers and providers, including EDF Energy, E.On and North Sea oil firm Harbour Energy, directors would have saved more than £100,000 on their most recent pay settlements, had the new rate been in place. Scottish Power and SSE are domiciled in Scotland, which retains a top rate of tax of 46p.

Energy bosses’ potential savings pale in comparison to those that would be enjoyed by Britain’s highest-paid woman, if her habitually vast pay deals were to continue uncurbed.

Denise Coates, the Bet365 boss who regularly tops a list of the UK’s biggest taxpayers, would see her bill reduced by £12.5m, based on last year’s pay figure of £250m. However, a return to the record £421m deal she earned the year before would incur £21m less tax under Kwarteng’s plans.

Pascal Soriot, CEO of Astrazeneca
Pascal Soriot, CEO of Astrazeneca, would save £687,500 on his £13.9m deal. Photograph: Chris Ratcliffe/PA

In the FTSE100, the best-paid boss is Endeavour Mining chief Sébastian de Montessus, whose tax on last year’s £16.9m settlement would have been £837,500 lower under Kwarteng’s plan. AstraZeneca chief executive Pascal Soriot would save £687,500 on his £13.9m deal.

Luke Hildyard, director of the High Pay Centre, said: “Anyone with annual take-home pay of the £160,000 that CEOs will gain on their pay deals as a result of this tax cut would be comfortably inside the richest 1% of the population. To provide that kind of income boost to people who are already multimillionaires rather than use it to support the NHS, schools, public transport and the transition to a green economy probably isn’t in the interests of the country.”

The 45p rate of tax applies to earnings above £150,000, which will instead by taxed at a rate of 40%.

According to Treasury projections, this will reduce HMRC’s tax receipts by about £2bn a year.

The calculations of what bosses could save are based on the most recent available figures for directors’ earnings, including annual reports and filings at Companies House. In practice, some figures will be higher or lower in 2023, depending on variable elements such as bonuses and share awards, which are taxed as income.

The Observer has approached the companies named for comment.