Chancellor to cut 50p tax rate

CHANCELLOR George Osborne appears set to abolish the 50p tax rate for some of the UK’s highest earners, according to various reports.

One of the main pillars in Osborne’s Budget, which has seen many of its key announcements already leaked, will be to cut the top rate of tax for those earning over £150,000 from 50% to 45%, or to 45 pence to the pound.
The chancellor will be left with the option to reducing the rate further to 40p by the time of the next general election.

As a panacea for criticism over cutting the rate of tax for the highest paid it is expected that Osborne will announce an increase in the personal tax allowance – the amount people can earn before paying tax – to around £9,000 by next April.

There is also expected to be some welcome news of an improved economic growth outlook from the Office for Budget Responsibility, which will raise its growth forecast to 0.8% from 0.7% for 2012.

The OBR’s figures are also expected to show that net borrowing for next year will come in around £3bn under its November forecast of £127bn.

In a separate announcement linked to the Budget, the Treasury announced that the government would provide up to £20bn of government guarantees on unsecured borrowing by banks, enabling smaller businesses to borrow at a cheaper rate.

The National Loan Guarantee Scheme will provide businesses with an annual group turnover of up to £50m with access cheaper finance, the Treasury said.
Around £5bn in guarantees will be made available in the first tranche.

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