The 50p rate of income tax is here to stay; at least for now

Online accountants may wish to be aware that the government has denied suggestions that it plans to reduce the top rate of income tax to 45p in the pound, instead of the current 50p.

The Daily Mail recently reported that the Treasury was working on implementing the tax cut next March. The news article reported that a “government source” had said 70% of gains are at 45p and as HMRC doesn’t get much extra with the rate standing at 50p, there is a case to lower taxes.

The “source” went on to say that the decision was about when to do it, not whether to do it. It all depends on the state of the UK economy and that could mean next year, or at the latest, 2013.

However, both the Treasury and Downing Street have strongly denied the claim. A spokesman from the Treasury said the government’s position on the 50p income tax bracket was clear and there are no plans, or timetable, to alter that.

Both Danny Alexander, the Treasury minister, and Vince Cable, the business secretary, have said it would not be right to focus tax cuts on the UK’s richer individuals. The coalition has already agreed to prioritise tax reductions for people on low and middle incomes.

MPs need to wait until HMRC has analysed personal tax returns before it finds out whether the higher rate tax is working and it is expected that data will be available within the next four months.

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