Reports today suggest that David Cameron is likely to scrap the 50p top rate of income tax after being presented with figures showing that the higher the rate, the less people pay.
Treasury projections found about 70% of revenue can be generated by raising the higher rate of tax from 40p to 45p, while only 30% comes from the second increase, to 50p. A senior Tory source said that this analysis was helping to shape the argument. “The decision is whether to do it in 2012 or 2013. By 2014, it’s too late to have an effect before the next election.”
The Treasury signalled its scepticism over the 50p rate at the time of the Budget and commissioned an assessment by HMRC to see how much tax the increase generated in its first year. George Osborne also said recently that he wanted to end “very high tax rates that only damage growth and enterprise”, widely seen as a reference to the 50p rate. However, a Treasury spokesman said that the HMRC review had not reported yet and that no decisions had been taken.
Elsewhere a Daily Telegraph reader takes issue with Vince Cable’s suggestion that the 50p tax rate could only be removed if replaced by a tax on the most expensive houses.
Would this be a good move for you? ERC are here to provide advice on remuneration options so please get in touch.
Thanks
Richard
