50p Rate of Income Tax causes debate


Victoria Studley, Director,


Tax Planning


The Chancellor George Osborne has now announced that he will deliver his autumn statement on 29 November 2011.


This pre-budget report is used to give an update on the state of the economy, and respond to the latest economic forecasts from the supposedly independent Office for Budget Responsibility (OBR).


The OBR is expected to downgrade its previous forecast for growth in the UK economy in 2011, and it will be interesting to see the Chancellor’s reaction to this.


George Osborne has recently described the state of the economic recovery as abnormal, and he stated that “We cannot just sit back and


wait for numbers that went down to come back up, or for lost ground to be made up”.


One of the points in the autumn statement could be the removal of the 50% rate of income tax as there has been a great deal of debate stating that it is damaging the UK’s economy.


The rate, which affects those earning over £150,000, was brought in as an ‘emergency measure’ in Labour’s 2010 Budget Report, and Osborne has since confirmed that it is only a temporary measure.


The hope is that the review being carried out by Revenue and Customs into the 50% rate will conclude early next year. Critics say that far from raising revenue, the 50% rate may actually cost the Treasury money as foreign investors are discouraged from coming to the UK and wealthy individuals may decide to leave Britain.


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