AS the debate about the top rate of income tax in the UK continues, a Yorkshire tax expert says that tax payers already surrender much more of their earnings than either the 40 or 50 per cent top income tax bands suggest.
In response to calls for the 50 per cent rate of income tax to be scrapped for people earning more than £150,000, Paul Captieux of Clough Taxation Solutions, which is part of Cleckheaton-based chartered accountancy firm Clough & Company, calculated how much tax a person pays once national insurance and the erosion of tax allowances are taken into account.
He said: “Those earning more than £40,000 actually pay 49 per cent rather than the 40 per cent headline rate and anyone earning more than £150,000 a year, and now facing the 50 per cent income tax rate, has to hand over 57.8 per cent of their earnings.
“Surprisingly, those with incomes between £100,000 and £114,950 are worst hit because they lose valuable tax-free allowances which mean they surrender 66.6 per cent of their earnings. However, with some good personal tax and financial planning these tax burdens can be reduced.”
The 50p tax rate was introduced in April 2010 and affects approximately 300,000 people earning over £150,000 a year.