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Income Tax: Tax Rates and Bands

Question for HM Treasury

UIN 210044, tabled on 10 October 2014

To ask Mr Chancellor of the Exchequer, what the yield was of the 50 per cent tax rate in each fiscal year of its existence from 6 April 2010.

Answered on

17 October 2014

i, ii and iii. The estimated impact of the additional rate on tax liabilities is set out in Chapter 5 of the HM Revenue and Customs report “The Exchequer effect of the 50 per cent additional rate of income tax”. This report sets out the latest estimates of the taxable income elasticity, and the forestalling and other behavioural effects. It is available at:

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

iv. In 1988 the top rate of income tax was reduced from 60 per cent to 40 per cent (the ‘higher rate’). The table below details the tax liabilities for higher rate payers from 1997/98 to 2009/10. Comparable figures are not available for the previous years.

Tax Year

Tax Liability after Deductions £million

1997/1998

32,900

1998/1999

38,590

1999/2000

45,700

2000/2001

54,000

2001/2002

56,400

2002/2003

57,000

2003/2004

57,100

2004/2005

65,200

2005/2006

76,400

2006/2007

84,300

2007/2008

93,200

2008/2009

89,700

2009/2010

82,800

v. Current and previous estimates of revenue from the 50% income tax rate can be found in the Office of Budget Responsibility’s March 2012 Economic Fiscal Outlook report, “Box 4.2: The additional rate of income tax”.

£ billion

Outturn

Forecast

Liabilities Basis

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Underlying Impact of 50p rate: Original Estimate

OBR estimate June 2010 (TIE=0.35)

0.0

2.5

2.5

2.7

2.9

3.2

3.5

Current Costing1

0.0

0.7

0.6

0.6

0.7

0.7

0.8

Difference

0.0

-1.8

-1.9

-2.1

-2.2

-2.5

-2.7

1 Based on the current estimates cost of reduction in the rate from 50% to 40%

vi. Chart 5.1 of the HMRC Report details the number of taxpayers with incomes above £150,000 for the years 2000/01 to 2010/11 (see link above).

The estimated number of taxpayers liable to the additional rate of income tax for more recent years is published in the HMRC National Statistics table 2.1 available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306826/Table_2.1.pdf

vii. Estimates of income tax liabilities by income range are published in the HMRC National Statistics table 2.5 available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306857/Table_2.5.pdf

Shares of income tax liabilities by percentile group are available in table 2.4 at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/306831/Table_2.4.pdf

These estimates are based on the Survey of Personal Incomes (SPI) outturn data up to 2011-12, and then projected to 2013-14 in line with the Office for Budget Responsibility's latest economic and fiscal outlook.

Answered by

Treasury