HMRC has recently published its data on tax and NIC receipts which is interesting, albeit in a fairly low key way.
The paper shows that, between 2001 and 2012, the average contribution to the total tax take from income tax, capital gains tax and national insurance is around 55%. Interestingly, in the two years before the introduction of the 50% band, the take went up to 58% and since then has dropped back down to the average. This would rather seem to support the hypothesis that increasing rates of tax does not, in itself, increase the tax take. In reality, the increase in tax seems to have encouraged people to take money out before the rates went up and then drop down to slightly lower levels to avoid the 50% band.
It will be interesting to see what happens come April 2012 when the rates go back down again. It seems likely that this year’s tax take will drop as people defer taking income to take advantage of lower rates next year.
Date: 12th September, 2012
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