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UK government income tax rates amongst highest in Europe

While the top rate of income tax in the UK at the moment is 40%, placing the UK 12th out of 27 EU countries, next year will see the top rate increased to 50% taking the UK up to 4th spot. Only Denmark (62.3%), Sweden (56.7%) and the Netherlands (52%) charge higher income taxes than the UK. This comes at a time when the average top income tax rate in Europe has fallen from 41.1% in 2003 to 36% in 2009.

As a consequence of the current and future tax regime in the UK there is a real danger that the competitiveness of the UK economy could be reduced and many employees could look elsewhere for employment. This could hit areas such as finance, where the UK financial markets have been one of the leaders for many years, which would ultimately impact fairly heavily upon the UK government's tax income. Yes, despite the fact that the UK government is attacking the UK financial system, these multi-million pound bonuses which are set to be banned have in the past brought large windfalls for the UK government!

When you consider that the US authorities are looking to increase their own top rate of income tax to 35%, this really does put the UK situation in perspective.

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