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45p Tax Rate

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45p Tax Rate

  1. 1. Budget 2012 50p top tax rate to be cut to 45p from April 2013 The Chancellor George Osborne Mr Osborne also argued that the increase confirmed during his Budget 2012 speech to 50p in 2010 raised about a third of theHM Revenue and Customs found the direct that the 50p top tax rate would be cut to £3 billion the government hoped it wouldcost difference between a 45p and 50p rate 45p from April 2013. Those earning raise, and cutting it to 45p would only costwas “only £100m” a year – and might have £150,000 or more have been subject to the government £100 million.raised nothing after adjusting for the loss of the 50% rate since April 2010, when it wasother tax receipts. brought in by the Labour government. Scrapped altogether There are currently around 300,000Mr Osborne told MPs that he made the Massive distortions people in the UK who earn £150,000decision to cut the top rate from April 2013 Mr Osborne said that the 50p tax rate would or more; of those 14,000 earn overin order to encourage wealth creators only be justified if it raised a significant £1 million a year.to return to Britain. ‘The 50p tax rate has amount of money but evidence from thecaused massive distortions,’ he said. ‘Self- HM Revenue and Customs (HMRC) showed It was widely predicted the tax wouldassessment receipts this year are below that the rate caused ‘massive distortions.’ be reduced from 50p to 45p rather than being scrapped altogether but seniorforecast by some £3.6billion.’ He said: ‘HMRC find that an astonishing officials refused to say if the 45p band GET IN TOUCH £16 billion of income was deliberately for those earning over £150,000 will be To review the key issues that shouldThe Treasury said cutting the top rate all the shifted into the previous tax year – at merely ‘temporary. ’ be on your agenda following Budgetway back down to 40p again would have a cost to the taxpayer of £1 billion, 2012, please email or telephone us –cost another £600 million. something that the previous government’s and we’ll get in touch. figures made no allowance for.’