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Will he or won’t he scrap the 50p income tax rate?

The big day is here at last! It’s Budget [1] Day and accountants will no doubt be tuned in at lunchtime to hear what delights George Osborne has in store for us over the coming year.

The will he or won’t he debate over scrapping the 50p income tax has continued to rumble right up until this week. Differing views have been bandied about with some people saying it will be scrapped and a different tax imposed on the wealthy, probably on their property.

A different idea sprang up in the Daily Telegraph at the beginning of the week. According to the paper, the Chancellor is set to tell us that the 50p rate is deterring entrepreneurs and investors [2]. The article goes on to say that the top rate will be a replaced by one at 45p in April next year. Treasury officials think that this reduction will actually bring in more revenue because fewer taxpayers will attempt to avoid it.

Labour and Lib Dem MPs are highly unlikely to welcome the move as it will be seen as a way to help the wealthy. Lib Dem ministers had agreed that the rate should be scrapped providing a “tycoon tax” was implemented in its place.

The Chancellor is also expected to announce that tax-free personal allowances will increase more than originally expected in April 2013. It is understood that this was signed off last Friday after last-minute coalition talks.

George Osborne says this Budget will help the working population. The UK wants to be a top economic power [3] and the only way to achieve that is to confront our problems.

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