UK PAYE Tax Calculator / Salary Calculator

The number 1 free UK salary calculator tax calculator since 1998. Calculate salary, national insurance, HMRC tax and net pay

BUDGET: Reduction on 50% tax

The 50% tax rate is getting a 5% haircut, following a government report which finds that the top rate has taken only £1.1 billion instead of the expected £2.6 for 2010.

Fifty-percent top rate income tax reduced to 45% following HMRC report

In last Wednesday’s 2012 budget, coalition Chancellor George Osborne announced a cut in the top rate of tax from 50p to 45p from April 2013. This follows a report by HMRC that was commissioned by the Chancellor of the Exchequer in 2011. The aim of the report was to find out how much revenue the tax actually raises.

The 50% additional rate of income tax was first introduced in April 2010 after being first discussed in the 2008 pre-budget report by then Chancellor Alistair Darling. The rate increase was initially expected to yield £2.4 billion but was criticised at the time by experts such as the Institute for Fiscal Studies.

The HMRC report was largely based on information from 2010 self-assessment tax returns (around 90% of which were available at the time of the report). It concluded that there was considerable behavioral response to the rate change including a large amount of forestalling. The report documents that the actual yield has been found to be around £1.1 billion, falling far short of initial estimates.

By reducing the top rate of tax to 45% and maintaining this level Osborne hopes to reduce tax evasion among higher earners who have been affected by the 50% rate.

This article was published in our News section on 27/04/2012.

Some Guides you may be interested in

  • Scotland Vs England And Wales: What Are The Differences In Tax? There are significant differences to how much tax you pay in Scotland in comparison to England.
  • AirBnb vs long-term-rentals For the holiday maker & professionals alike, it’s safe to say that short-term let platforms - such as AirBnb, Flipkey, or Homeaway - have been a bit of a game changer.
  • Bookkeeper v Accountant Are you paying your accountant to prepare your books? Could you save some money by hiring a bookkeeper? Clare Doherty explains the key differences…
  • 5 Tax changes that may affect you this year Following the start of a new tax year, it’s always useful to stay abreast of changes to your responsibility. Certain legislative updates in 2019 have been overshadowed by the spectre of Making Tax Digital for VAT, causing smaller (but significant) changes to be overlooked.
  • Top Ten Claimable Expenses for Limited Companies Let’s start with a thought experiment. I’ll set the scene. You’re a limited company owner, and you, as the director, are the sole employee. You also - understandably – love learning about tax. You open up the Monday morning paper to find some exciting news - HMRC has hinted there are going to be some big changes in the upcoming UK budget.....
  • Salary vs Dividends A guide to tax efficient remuneration for Limited Company directors for 2019/20.
  • What changes to buy-to-let mortgage interest tax relief for landlords? Undoubtedly the biggest source of tax confusion for prospective landlord clients that we speak to here at TaxKings relates to the changes to tax relief for residential landlords, introduced by the UK Government in April 2017.
  • Top Ten Year-End Tax Planning Tips for Small Businesses Tax planning for small businesses is not always straightforward, in fact it can be a serious minefield for the unwary. The chances are however that you and your business could almost certainly pay less in tax, with help from your tax advisor. Here are some tips to get you started.
  • Making Tax Digital for Small Businesses Making Tax Digital for VAT (MTDfV) comes into effect from 1st April 2019. With Chancellor Philip Hammond announcing in his 2019 Spring Budget that MTD for other taxes will not be mandated until at least 2021, all of our focus is now on the VAT implementation.
  • End of Tax Year planning - Use your Allowances to reduce your tax bill. Last minute Tax Planning. Our guide to what annual allowances you have and how to use them to reduce your tax bill.

More from our News section