The 2010/11 tax data is not the basis for deciding on the success of the 50p tax

Posted on

I’ve already noted that in 2011/12 H M Revenue & Customs forecasts it will collect £6.7 billion from the 50p tax rate.

As their data shows, they forecast people in this bracket will pay £47 billion in tax. I have extrapolated that over £6.7 billion of that will be at the 50p rate. All this is in my new TUC report.

It’s important to note therefore that HMRC are not so optimistic for 2010/11. There they forecast almost ten percent fewer people will pay tax at 50% – some 30,000 fewer in all, and the tax paid by them will be more than £5 billion less overall. The 50p rate yield will also, very obviously, be lower as a result.

Why’s that? Candidly, it’s not clear from their data, all of which is forecast. But it seems at least possible they think people may have avoided the onset of the tax rate by bringing income forward into 2009/10. If that’s the case the 2010/11 data would be the wrong basis for making any decision on the effectiveness of this tax.