Pressure eased on George Osborne to cut the 50p tax rate today after firms said it was not stopping them recruiting top talent.
A survey of 50 large companies allayed fears that the top income tax rate was preventing them attracting senior managers to the UK, with just 13 per cent saying it was proving a barrier.
The KPMG report said it was a "dramatic change of sentiment" since 2009 when more than 80 per cent of firms expected the tax to hit recruitment.
But the companies did say the 50p rate for people earning more than £150,000 should be scrapped because it was inefficient, the Financial Times reported. There was "no evidence" to scrap the rate immediately, the report said, but warned it would damage UK competitiveness if it remained in the long term.
Mr Osborne has come under pressure from London Mayor Boris Johnson and others to axe the 50p rate over fears it is hitting the City.
The Chancellor, who will deliver his autumn statement on Tuesday, has commissioned a review into whether it is actually making any money.
A research group this week suggested it was costing the Government £1 billion a year as rich people leave the country or avoid paying the tax.
But Liberal Democrats are keen to see it retained, and Chief Secretary to the Treasury Danny Alexander said he expected the review would show it is "making money for the Government".
