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UK’s 50p tax rate is higher than most other EU countries

UK’s 50p tax rate is higher than most other EU countries

KPMG’s global tax survey has discovered that the UK’s top personal income tax rate of 50% is higher than the top rate in the majority of other EU countries.

Sweden has the highest rate of income tax at 57%, Denmark and the Netherlands have rates of 55% and 52% respectively, while Austria and Belgium both levy the same 50% rate as the UK on their high earners. The average personal income tax rate in the EU works out as 37%, and in Western Europe it is 45%.

KPMG surveyed 96 countries and found that the only two other nations with top rates higher or equal to the UK’s were Aruba at 59% and Japan at 50%.

Marc Burrows, from KPMG, said everyone notices headline rates. The UK does come out a bit better when you consider social security taxes and tax thresholds, but people don’t tend to take those into account.

He went on to say that Western European countries do not have particularly competitive rates when compared to Asian countries such as Hong Kong (15%) and Singapore (20%).

Last month, the Institute of Fiscal Studies warned that the UK’s 50p tax rate could be losing money for the government. The IFS pointed out that there are several ways to reduce taxable income when tax rates rise.

The Treasury estimates that the top rate will raise £2.7 billion per year, but the Chancellor of the Exchequer has asked HMRC to analyse the revenue raised so far. The Tories say the 50p rate is purely temporary but the Lib Dems want it to be a permanent feature of the UK’s taxation system.

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