Budget 2012 - Chancellor cuts 50p top tax rate
Wednesday 21st March 2012
Chancellor George Osborne has announced that the Government is to reduce the controversial 50p top rate of income tax to 45p from April 2013.
But his Budget has taken a swipe at the wealthy in a series of other tax and anti-avoidance measures.
Justifiying the end of the 50p top rate of income tax paid on earnings over £150,000, Osborne said it damaged competitiveness and had only raised a third of the £3billion expected.
Instead, five times as much would be raised from the very rich by other policies in the Budget.
New "anti avoidance" tax rules would tackle the "morally repugnant" practice of people not paying the tax that they should.
Most notable of these is the plan for a staggering 15% stamp duty charge levied on people who buy expensive homes using offshore companies.
Individuals buying property costing more than £2million will also pay a new rate of 7%.
At the other end of the scale, the threshold at which income tax is paid - £8105 from next month - will rise to £9205 in 2013.
There were changes also to the unpopular child benefit measures. Payment should have been axed when one parent earned more than £43,000 but this has been ditched after protests. Instead child benefit will now be removed in stages for those earning more than £50,000 - stopping completely at £60,000.
For pensioners, there will be an automatic review of the state pension age to ensure it keeps pace with increasing lifespans. And a new single-tier state pension for future pensioners will be set at £140 and be based on contributions.
Smokers were once again hammered - this time with tobacco tax rising by 5% above inflation, meaning 20 cigarettes will cost 37p more.
Osborne's outlook for the economy in general saw the growth forecast for 2012 rise marginally from 0.7% to 0.8%.
He also said the Government was "on course" to eliminate the structural deficit by 2016-7.
And, while the UK was expected to avoid a "technical recession" the euro zone and oil prices remained a threat.
Unemployment is expected to peak this year at 8.7% before falling.
Osborne said it was a "Budget that rewards work".
"Britain is going to earn its way in the world," he said. "There is no other road to recovery."
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