During an interview with The Independent the night before the annual Liberal Democrats’ party conference, Nick Clegg insisted that the 50p tax rate was here to stay, and any move to scrap the higher tax rate would be blocked.
Clegg said that public support for the tax system could be seriously affected if the higher rate of tax was abolished, especially as people on low or middle incomes are struggling to get by. George Osborne has been very open in his desire to abolish the 50p rate of tax on any income over £150,000, which was introduced by the Labour government. The priority for the Liberal Democrats, according to Nick Clegg is to reduce the tax burden for people on a lower income. He said:
“We are not there to rush to the aid of the top 1% of very, very rich people who are not in straitened circumstances.”
This stance by the Liberal Democrats is sure to anger some Tory Members of Parliament, who are fighting for the abolition of the 50 p tax. Clegg confirmed that the only way he would back the abolishment of the higher tax is if the revenue raised was extremely low and new taxes were introduced. A “mansion tax” has been mentioned, which would levy a one percent annual charge on homes with a value exceeding £2 million. He would also like to see a land tax and restriction of tax relief on pension contributions to the basic rate of tax, 20 percent.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.