The Rich Make Plans To avoid Higher Rate.
- The better off are finding ways to 'dodge' the tax on incomes over £150,000
- George Osborne feels the pressure to scrap the tax band
Labour introduced the 50p tax band and the pressure is now on for George Osborne to scrap it with claims that it makes no extra money.
New figures suggest, the 50p tax band is 'not working' even suggesting that revenues have decreased since it was introduced.
The tax band was placed on the rich who have an income of more than £150, 00; however the figures suggest that the rich are finding ways to get out of making the payments.
January 2012 compared with January 2011 tax returns had dropped more than £500 million; this is from those who do self assessment tax returns. January 2012 was £10.35billion in comparison to January 2011 £10.86billion
George Osborne has been awaiting these figures as they will help prove the usefulness of the tax rate.
January 31st was the deadline for all self assessment forms for year 2010-2011; this was the first full year since the tax has been introduced.
The Centre for Economics and Business Research said it was evidence the 50p tax rate was starting to take effect.
These latest figures will put more pressure on the Coalition government to drop this levy as there are also worries that it is forcing entrepreneurs to work abroad.
Different figures, which were also published yesterday, gave more evidence the rich are trying to avoid paying the tax.
Total income tax was up 2.4 per cent a shockingly small amount in comparison to Corporation tax which was up 9.3 per cent on last January.
These figures suggest that many business executives have decided to pay themselves in dividends or given themselves a big bonus, so they did not lose half their wages to the Inland Revenue.
The accountants Grant Thornton, senior tax partner Mike Warburton; said 'I had one client who took a £10million dividend before 50p tax came into force in April 2010.
'He just said: "That will see me through until it is scrapped".'
Mr Warburton said: 'My own view is that the tax raised by the 50p band is very questionable as to whether it actually raises any additional revenue.
'It is a big concern that it is putting off international business people from investing in this country.
'We need a big sign saying "Open for Business" above the UK but a 50p tax rate is exactly the reverse.'
The Institute of Directors have also heavily criticised the tax the business lobby group, which said it is 'foolish' and 'totally unjustified'.
The treasury insisted in April 2010, that it would be worth up to £2.5billion a year despite being warned it would raise 'little or no tax.'
The latest figures show that there has been tax planning opportunities and accountants will no doubt been advising clients on how best to avoid paying it.
HMRC is currently doing an assessment of how much revenue it actually raises. The Chancellor has always made it clear the 50p tax rate is 'temporary' a source from the treasury said yesterday.