50pence tax rate costing UK £500 million
14 Sep 2011
According to a study the 50p rate of income tax in UK is costing the Treasury up to £500 million a year as high earners shelter their money abroad, a leading think tank has warned.
The The 50p tax is imposed on those earnings over £150,000 per annum, over and above their normal taxes.
The Institute for Fiscal Studies (IFS) warned that the 50p rate of income tax had led people who earn over £150,000 to seek legal ways out of the higher tax liability.
The finding is expected to add to the pressure on George Osborne, the chancellor, to do away with the 50p rate next year.
According to Paul Johnson, director of the IFS, it looked like the 50p rate might be too steep and that it was possible it would reduce tax revenues.
He added it could lead to more people investing in tax avoidance, illegally hiding their income or even leaving the country altogether.
