50p Income Tax Rate to be Scrapped

Nick Clegg, Vince Cable and George Osborne have all recently suggested that the present 50p tax rate on incomes over £150 000 will be scrapped.

London, UK (Pryce Warner International) March 29th, 2011 - The measure introduced a year ago by the Labour government was seen as a short-term solution to driving up tax revenues and cementing the “all in it together” mentality.

The present coalition government seems committed to keeping the tax rate purely a short term measure with Nick Clegg and Vince Cable both commenting in separate interviews it will likely end by 2015.

Chancellor of the Exchequer George Osborne also strongly hinted at this during his delivery of the budget stating: “As well as reviewing revenues from the 50p tax rate, we will also be redoubling our efforts to find ways of ensuring that owners of high value property cannot avoid paying their fair share.”

This remark and ones by Vince Cable strongly hint that the government is planning a new form of the “mansion tax”, a proposal that aimed a 1% levy on homes valued over £2m. The proposal was ultimately unsuccessful under the Labour government but the current coalition seems keen to reintroduce it in some form.

Vince Cable affirmed the Chancellor’s statement, hinting that while the “mansion tax” will not come into effect, a similar approach may be used: “I and George Osborne agree that we have to move away from extremely high marginal rates of tax on income…the emphasis may well have to shift from high marginal rates of tax on income to taxation of wealth, including property”.

Despite Mr Cable and Mr Osborne’s comments, a Treasury spokesman emphasised that last week's budget laid out all existing plans, commenting: "no detailed planning on taxes for top earners are currently being developed by officials”.

David Harra, a Senior Market & Investment Analyst with Pryce Warner Interntional Group commented: "While the exact form renewed taxation on high value properties will take is not yet clear, between Mr Cable and Mr Osborne’s comments and the budget proposals to stamp out tax avoidance and ensure the rich pay their fair share, it seems some new form of “mansion” will likely come into effect. For those considering investing in property, the potential changes raise a strong possibility that investing overseas property may prove a better long-term investment than those in the U.K."

Pryce Warner International Group provide International Asset & Investment Management, Independent Financial Advice & QROPS Overseas Pensions.

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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