George Osborne is looking to scrap the 50p top rate of tax in a bid to retain international competitiveness in the UK. The 50p rate was introduced during the end of Gordon Brown’s term under the Labour government and there has been debate as to whether this was a clever ploy to hinder the Conservatives in the event that they won the election.
The Conservatives will be making a bold move should they decide to cut the top rate of tax in spite of growing austerity and unemployment in the UK. The rate is expected to be reduced to 45p rather than being abolished and it is hoped that a reduction in Income tax may provided the necessary stimulus to the British economy. The government are also proposing to increase the Personal Allowance threshold to £10,000 to encourage low income earners into work.
The tax cuts will no doubt require compensating cuts and taxes elsewhere with a new Mansion Tax suggested in the latest proposals.