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50p Tax Rate to be Abolished?

The Chancellor, George Osborne, has confirmed the 50p rate on tax will be abolished, although a definite date for the change in legislation has yet to be announced.

HMRC officials are currently reviewing the 50p rate to see exactly how much money it raises, amid critiscism that the increase from 45p has merely driven high earners to avoid tax altogether.

According to sources, Treasury analysts have figures which show that raising the top rate of tax on those earning more than £150,000 a year from the old rate of 40p in the pound to 45p would bring in £1.65billion a year. But increasing it to 50p would lead to diminishing returns, with only another £750 million at most.

This has been supported by the Chancellor, who has indicated that early analysis of self assessment returns does not suggest the tax is raising significant amounts of money, claiming it is driving wealth generators out of Britain at a time when their businesses and jobs are needed most.

As an alternative measure, a ‘mansion tax’ has been proposed, whereby a taxation of wealth is put in place, which includes property. It is claimed this would take acocunt of the fact that the wealthy have got to pay their share.

If you are concerned about how this will affect your finances, contact a McLintocks Advisor today on 0845 680 7800.