50% income tax rate set to stay says Cable

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50% income tax rate set to stay says Cable

Posted Sep 27, 2010

The 50% additional rate of income tax is set to remain in place for the foreseeable future, not least as it is considered to be a symbolic measure by the Coalition.

Business Secretary Vince Cable, speaking at last week's Lib Dem conference, confirmed that the 'additional' rate of income tax, which applies to income in excess of £150,000, will remain in place.

There would be uproar if the new tax band were removed, and with the new Government keen to press home the importance of 'fairness' in the new age of austerity, it seems unlikely that the new band will be removed during this parliament.

With the 50% rate applying to just 1% of UK taxpayers, Cable called it a "symbolic measure":

"I don't think any of the major parties are looking to change that. The coalition government came in, both the Conservatives and ourselves accepted that was the right thing to do in a national emergency. There is no discussion about removing it."

In addition to the new rate of income tax, which came into play on 6th April 2010, contractors earning £100,000 or more will see the stepped erosion of the personal allowance by £1 for every £2 earned above six figures, meaning that the entire personal allowance is removed when income reaches the £112,950 mark.

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