Reducing the disincentive

During the most recent Budget, the Chancellor of the Exchequer scrapped the 50% tax rateAnalysis carried out by HMRC indicates that, as theorised previously, the income from this tax rate is below that expected by the government. 

Rather than simply scrapping the higher rate band, however, the government is reducing it to 45%.  It is unclear how much analysis has been carried out to determine whether it was the level of the tax rate rather than its actual existence that was causing the lower than expected return; hopefully HMRC will be continuing the monitor the impact of this tax rate going forward.


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