Income Tax: Tax Rates and Bands

HM Treasury written question – answered at on 20 November 2017.

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Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer

To ask Mr Chancellor of the Exchequer, what estimate he has made of the total reduction in the income tax liability for additional rate taxpayers as a result of reducing the additional rate from 50 pence to 45 pence in each financial year since 2013-14.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

The latest estimated cost of reducing the additional rate of income tax to 45 per cent is available on the government website, Budget 2013, page 66, table 2.2:

https://www.gov.uk/government/publications/budget-2013-documents

HMRC published a detailed evaluation of the impact of the 50 per cent tax rate on the Exchequer in 2012 ‘The Exchequer effect of the 50 per cent additional rate of income tax’. This remains the best available estimate of taxpayer responses to changes in the additional rate of tax. This report contains more information on the methodology for estimating the impact of the policy, specifically in annex A:

http://webarchive.nationalarchives.gov.uk/20130127161217/http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf

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