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Number of people paying top rate tax set to fall

Despite the fact that the UK government is set to introduce a 50% top rate of income tax the government's own figures suggest the next two years will see a significant fall in the number of people caught up in the high rate tax band. It is estimated that the number of people paying 40% tax will fall from 3.89 million in 2007/08 to 2.9 million in 2009/10. This will see a significant fall in the government's income tax receipts at a time when money is tight and the government is desperate to raise funds.

The report by HMRC blows wide-open the government's argument for introducing a 50% tax rate and exposes this as nothing but a political move. As we approach the next general election this issue is sure to be a factor in the minds of many business people and high earners in the UK who now pay a substantial portion of the UK government's income tax receipts. When you consider that just over 2 million people were on the higher tax rate back in 1997, the government has managed to do some excellent financial manoeuvring to bring nearly double that figure under the high tax rate umbrella today.

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