The top rate of income tax is to be cut from 50 per cent to 45 per cent in April 2013, the Chancellor of the Exchequer has confirmed.
In this year’s Budget, George Osborne MP confirmed that the government has moved to make the tax system more competitive with those regimes set by other countries within the G20.
Speaking about the changes to the tax regime, Osborne said the current taxation policy is ‘widely acknowledged’ as harming the UK economy.
He explained: “In last year’s budget I asked HMRC to look at the evidence and self- assessment returns since this January. I am publishing that report today.
“The 50p tax rate has caused massive distortions. £16 billion of income was deliberately shifted into the previous tax year at a cost of £1 billion.
“No Chancellor can justify a tax rate that damages our economy and raises next to nothing. Thanks to the other new taxes on the rich I have announced, we will be getting five times more money from the wealthiest in our society.
“The richest pay more, the economy benefits and Britain is competitive again.”
In addition, the government has confirmed it will reduce the main rate of corporation tax by an additional 1 per cent from April 2012.
The rate will therefore fall by two per cent, from 26 per cent to 24 per cent in April 2012, to 23 per cent in April 2013 and to 22 per cent in April 2014.