Budget Summary 2012

Amidst fears of a double-dip recession, Chancellor of the Exchequer George Osborne had the unenviable task of presenting the Budget for the third time on 21st March. It came as no surprise when the Chancellor announced very early on in his speech that there would be no "unfunded giveaways", confirming speculation that any concessions would need to be offset by an increase in tax elsewhere.

Although there was a significant change to the Stamp Duty on residential property costing over £2,000,000, the wealthy will benefit from a cut in the top rate of tax down to 45% from April 2013 (currently 50%). Individuals will gain from an £1,100 increase in the personal allowance from April 2013 but they could also lose out if they are earning over £50,000 and in receipt of Child Benefit. Large companies will welcome the 2% cut in their rate of corporation tax. But whether small or large, all businesses were disappointed the government did not reverse their plans to reduce the Annual Investment Allowance to just £25,000.

50p tax band to cost UK £1bn a year

The UK faces a lost generation of wealth creators, with the 50% top rate of income tax set to push them away and cost the economy billions, a new report has said.

Published by the Centre for Economics and Business Research (Cebr), the report, entitled ‘The 50p tax - good intentions, bad outcomes’ is an examination of how the UK's high-rate marginal tax impacts on Treasury revenues, and looks at how income tax has changed since the 1980s.

According to the Cebr's figures, the UK's 270,000 major wealth creators (the top 1% of income tax payers) contribute around GBP40bn (USD62bn) in income tax a year, or 25% of the GBP163bn paid in income tax to HM Revenue and Customs (HMRC) in total. The 50% rate of tax is charged on all incomes over a GBP150,000 threshold. Among the conclusions offered by the report is the assertion that the UK has lost its place as an attractive, low-tax jurisdiction that welcomes wealth-creators and has instead become one of the most punitive. As a result, the Cebr has warned that other European countries now are competing in a "silent auction" for the tax from high earners.