Abolish the 50% income tax rate call from the IoD

As Budget Day gets ever closer, accountants in London and other major UK towns and cities are wondering what measures George Osborne can come up with to boost the economic recovery.

The Institute of Directors believes that people are starting to see the UK as a high-tax economy, which is obviously not good if we want to attract foreign investment. The Institute has come up with four measures that could help to dispel that perception.

Corporation tax should be reduced until it reaches 15% by 2020, the 50% income tax rate should be abolished, entrepreneurial investments should be exempt from capital gains tax and the personal allowance on earnings over £100,000 should be removed.

Ensuring the UK has the lowest rate of corporation tax in the world would cost about £9 billion a year but this could be funded by continuing to restrain public sector growth. A low corporation tax rate will send out the message that the UK is open for business.

The Institute would like to see the 50% tax rate abolished within 4 years and corporation tax at 15% by 2020. Deep cuts in the rate could completely transform the behaviour of businesses, which in turn would generate more revenue in the future.

In the next few days, we’ll read lots of suggestions from professional bodies as well as entrepreneurs and contractor accountants. Will George Osborne listen to the views of the general public? Only time will tell, but one thing’s for certain, he has to take measures to help small businesses prosper or the recovery will be nothing more than a damp squib.

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