Recent indications are that the 50p rate of tax won’t be scrapped just yet. The Prime Minister has insisted that the deficit reduction should be shared by everyone, and shared out fairly. Business leaders have called for the higher tax rate to be scrapped, arguing that it would attract investment into the UK. Deputy Prime Minister, Nick Clegg has made it clear that he is totally against scrapping the rate at this time.

Over 30 business leaders have called for action in two main areas of taxation, in an open letter addressed to the Chancellor. One area for action is the increase personal allowances by £1000 more than originally planned. The leaders are also calling for the highest rate of tax to be restored to 40p. However, David Cameron who was speaking to Jeremy Vine on Radio 2, said:

“I have been very clear- we have all been very clear- that we have to do this in a way that is fair so that the broadest backs bear the biggest burden. That is why we haven’t changed for instance the 50p tax rate.”

Business leaders in London believe that the abolition of the 50p tax rate will revive growth and encourage investment for entrepreneurs, leading to the creation of jobs. HM Revenue & Customs are going to carry out an evaluation of tax collected as a result of the 50p tax rate, which business leaders consider to be immaterial. Senior Conservatives are keen to scrap the higher rate of tax, but know a time of austerity isn’t the right time.

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Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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