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Budget 2009: Higher rate tax shock

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22nd Apr 2009
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The Budget included a surprise revision of the announcements made in November 2008.

Mr Darling originally proposed a top rate of income tax of 45% applying to taxable income in excess of £150,000 from 2011. However, he has now announced two changes to this plan.

First, the top rate of tax will now be 50% rather than 45%, and second it will now commence in April 2010 rather than April 2011.

In addition the Chancellor made reference to the withdrawal of personal allowances for those with taxable income of more than £100,000. Although this was intended to happen in two phases from £100,000 and £140,000 taxable income, the sparse detail in the Budget speech suggests that this will now happen in one swoop at £100,000. The original proposal intended to reduce the allowance by £1 for every £2 income over the limit.

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