Income Tax: Tax Rates and Bands

Treasury written question – answered on 24th November 2010.

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Photo of David Laws David Laws Liberal Democrat, Yeovil

To ask the Chancellor of the Exchequer what his most recent estimate is of the (a) gross and (b) net effect on tax revenues of the introduction of the 50 per cent. tax band; what behavioural assumptions underlie these estimates; and if he will make a statement.

Photo of David Gauke David Gauke The Exchequer Secretary

The estimated revenue to be raised from the 50% rate of income tax on incomes over £150,000 was £1.3 billion in 2010-11, £3.1 billion in 2011-12, and £2.7 billion in 2012-13. These estimates are as shown in the March Budget 2010 report, table A11 on page 140, available at:

http://webarchive.nationalarchives.gov.uk/+/http://www.hm-treasury.gov.uk/d/budget2010_annexa.pdf

The 50% tax rate costings include an estimated behavioural response to allow for changes in work effort, tax planning, avoidance, evasion or migration motivated by the tax increase. These factors reduce the potential static yield from the measures by around two-thirds.

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