New 50% tax rate kicks in today
More than 300,000 of the UK's highest earners will today feel the pain of an increase in the top rate of tax in the UK from 40% to 50%. The new 50% rate will apply to those earning over £150,000 a year although there is also a further twist for those high earners in the UK. They will also lose their tax-free personal allowance of £6,475 a year which will mean somebody earning over £200,000 a year will pay an additional £8,000 in taxation.
As we approach the general election the introduction of a 50% tax rate in the UK has obviously polarized many voters into their respective camps. The policy of divide and conquer is one which the Labour Party has not used in the recent past with many believing that success under Tony Blair was achieved by appealing to the middle classes.
Gordon Brown has taken a very different approach and ultimately alienated the financial industry and high earners in the UK. Whether this policy will backfire at the election remains to be seen but a return to grass-roots Labour votes would appear to be the preference of the day.
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