The 50p tax rate is failing to generate the expected amount of revenue, according to official figures.
In January, the Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a fall of £509 million compared with the same month last year. With the majority of wealthy taxpayers paying their income tax in January, Chancellor George Osborne had been eagerly awaiting the figures as they provide the first evidence of how the 50p tax rate is performing
This is because 2010/2011 represents the first full year the 50p rate, which had been expected to increase tax revenues from self-assessment by around £1 billion, has been in operation. Despite failing to specify the amount of money which was paid at the 50p rate of tax, the figures do point to the fact that the tax is failing to meet revenue expectations. A Treasury source attributed the fall in revenue to wealthy individuals who were moving their finances to avoid paying the 50p rate.
"It's true that [self-assessment] revenues are a bit disappointing - it's still early, but it looks like there's been quite a lot of forestalling and other manoeuvring to avoid the top rate," the source told the Telegraph.