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50p tax rate could be scrapped

19.03.12

The much-debated 50p tax rate for the super-rich could be scrapped in this year’s budget following calls from businesses and financial experts. According to reports, Chancellor George Osborne is ‘determined’ to abolish the tax, which should in turn help the country’s economy grow.

Any excess salary over the £150,000 threshold is taxed at 50%, and there are fears that this could drive our high-earners and even our large businesses out of the country. It is also argued that entrepreneurs will be tempted to look elsewhere when starting up new businesses.

The tax was introduced back in April 2010 when Labour was in power. It aimed to generate an extra £2.4bn of income for the UK, but it is thought to have actually generated a lower tax bill than usual.

At present, anybody earning between £35,001 and £150,000 is taxed at 40% and any earnings over that are taxed at 50%. The rate is likely to be cut by 5% to 45p in every £1.

Last month, over 500 businesses owners and entrepreneurs signed a letter to The Daily Telegraph, urging Osborne to abolish the high rate, and to argue that the 50% tax rate on the rich was ‘damaging the economy’.

On Wednesday, the Chancellor will unveil the budget to the House of Commons, and if the speculation about the eradication of the 50% tax rate turns out to be true, it will surely create further debate across the country.

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