The 50p income tax rate – join the campaign to abolish it

Since April 2010, income above £150,000 a year has been taxed at 50 per cent. The effective rate, once employers’ and employees’ national insurance are taken into account, is 58 per cent, computed as follows.

Tax rate = 100 x 65.80/113.80 = 58 per cent.

• This rate is too high.
• It causes economic damage by distorting behaviour.
• It gets the UK a reputation as a high-tax country, deterring foreign groups from setting up businesses and investing in the UK.
• It probably loses the Government money. People are unlikely to work hard to maximize their income when the Government takes more than half of every extra pound.

Now you have a chance to help with the campaign. The IoD is joining a number of organisations to write a letter to the press. We seek at least a thousand signatures from people who run businesses, and who know how important it is to make sure that the tax system does not deter enterprise. The letter can then be published, making the Chancellor aware of the strength of feeling in the business community.

The text of the letter is as follows. Below it, you will find a link that allows you to sign it online.

This letter is not restricted to IoD members, so please feel free to let other business people know about this page, whether or not they are members.

Letter to the press

Dear Sir,

Given the current state of the UK economy, we urge the Chancellor to consider scrapping the 50p top rate of tax in his forthcoming budget.

The tax, which is in effect a 58p rate after employers’ and employees’ national insurance are taken into account, puts wealth creators likes us in a very awkward position.

The richest should help the poorest in society. 1% of taxpayers are already responsible for 24% of income tax. But penalising high earners through an unfair, politically-motivated tax puts populist politics before sound economics.

The 50p tax is set to reduce government income in the medium term. It will damage the economy, public services and charitable giving.

As businesspeople, we want to see our industries, our economy and the third sector thrive.

Repealing the 50p tax would be a good demonstration of the Chancellor’s wish to celebrate British enterprise, stimulate British industry and contribute to the Government’s growth agenda.

The sooner this tax rate is repealed, the better.

Click here to sign the letter.