|UK top Rate of Income Tax May be Slashed in Next Week's Budget|
The Chancellor is reportedly planning to cut the top rate of tax from 50p to 40p.
Speculation is mounting that the Chancellor George Osborne will cut the 50p tax rate in next week's budget after it emerged that the Liberal Democrats have dropped their opposition to ditching the controversial tax.
According to a report in today's Daily Telegraph, government sources have said that Deputy Prime Minister Nick Clegg is ready to consent to the top tier tax band being scrapped in exchange for stricter tax rules and tax cuts for low earners.
But Treasury sources have dismissed the alleged deal as "wild speculation".
Labour raised the upper tax band from 40p to 50p in 2010-11 for people earning more than £150,000 a year.
There are suggestions that the tax rate could revert to 40p, or could be reduced to around 45p.
Prime Minister David Cameron and Mr. Osborne are to hold crunch talks recently with Mr. Clegg and the Chief Secretary to the Treasury, Danny Alexander, to discuss the matter further.
The Liberal Democrats are expected to demand alternative methods of taxing the wealthy in addition to higher tax free allowances for lower paid workers.
An HMRC study set to be released next week is set to reveal that the top tax tier is raising significantly less than the £2.6 billion in revenue originally predicted by the Treasury.
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Published on our website on March 19, 2012