Increased pressure to scrap the 50p rate of tax

Increased pressure to scrap the 50p rate of tax

The chancellor is under increasing pressure to scrap the 50p rate of tax, after claims that revenue has dropped since it was introduced. The higher rate of tax applies to income exceeding £150,000, but figures indicate that wealthier taxpayers may be dodging the tax. According to recently released data, the tax due after completion of self-assessment tax returns in January 2012 was £10.35 billion. In January 2011, the tax due was £500 million higher, at £10.86 billion.

George Osborne was waiting for the figures as evidence to show whether the 50p tax rate would be useful. The tax returns which were completed for 2010-11 provided the first full year’s evidence of tax yield following the introduction of the 50p rate. According to the Centre for Economics and Business Research, the figures are proof that the higher rate of tax is affecting tax receipts. George Osborne is under increased pressure to drop the highest rate of tax, as fears that entrepreneurs will move from the UK increase.

Other figures recently published indicate that wealthy people are taking steps to avoid paying the 50p rate. Although payments of income tax had increased by 2.4 percent, the figures for Corporation Tax indicated a 9.3 percent increase, suggesting that some executives of companies had paid themselves a large bonus or dividend before the 50p rate came into force.

Until the assessments by HMRC are completed, a low cost accountants will maximise revenue in compliance with HMRC and the latest legislation.