UK Tax News from TaxPenny

With the UK Budget date looming ever closer, Chancellor George Osborne is being put under fresh pressure to ease the tax burden of higher earners by removing the top 50 percent tax rate, as well as other taxation restrictions aimed at top earners.

The Adam Smith Institute, a free market think-tank, published a report warning that the financial implications of these penalties on the nation’s coffers would be disastrous. The effect of people emigrating or using tax avoidance schemes would cost nearly £350 million as well as curtailing any economic growth for a decade.

The proposals put forward so far include:

• Reduce the higher rate of income tax to 35%
• Remove the £30,000 ‘non-dom’ charge
• Revert Capital Gains Tax to the previous 18% flat rate
• Remove the tapering of personal allowances for people earning £100,000 and above

Using our custom tax calculator to simulate these changes on income tax yields the following results:

Based upon a Male, Under 65, Earning £50,000

• Tax Due in 2011/2012 currently is £10,010
• Tax Due in 2011/2012 with adjusted rates would be £9,634
• Saving of £31 per month

Based upon a Male, Under 65, Earning £150,000

• Tax Due in 2011/2012 currently is £53,000
• Tax Due in 2011/2012 with adjusted rates would be £44,634
• Saving of £697 per month