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Proposal to Abolish Top UK Income Tax Rate Scrapped — Orbitax Tax News & Alerts

The UK government on 3 October 2022 decided to scrap its earlier plan to abolish the top 45% marginal income tax rate for earned income in excess of GBP 150,000. Although the budgetary cost of the top rate abolition was estimated at a relatively modest GBP 2 to 3 billion (compared to the mini-budget's proposed total of GBP 45 billion in largely unfunded tax cuts), it drew opposition from several corners, including from the IMF and from within the conservative parliamentary majority. The government initially defended the top rate abolition on the basis of presumed trickle-down economic effects, then sought to delay the vote on this part of the mini-budget until conducting further studies. Faced with the prospect of a rebellion within its own parliamentary majority, it eventually resolved to scrapping the proposal altogether.