Whilst most taxes are bringing in higher revenues to the UK, the self-assessment income tax has fallen far short of where government expected it to go. As of January 2012, the Treasury only received a total of £10.35bn from those filing self-assessments which as down £509 million over January of last year.
According to senior government sources, this is indicative of the fact that Britons who are well-off have found ways to avoid paying this new higher rate by manoeuvring the system. It is now expected that new pressures will be heaped on the Coalition government to lower the levy as fear is growing that entrepreneurs will be quite literally forced to move abroad.
This particular filing with the new 50p rate has been eagerly awaited by Treasury and ministers alike. January is the time when a majority of taxes are paid by those better-off and this was the first year in which the new rate was in effect. It had originally been expected that this new rate would raise revenues by £1bn from the self-assessment rather than the decrease it actually saw.
There have, as yet, not been any official figures released so it is unclear how far short of the mark the 50p levy fell, but it is clear it didn’t come close to the expected amount. One source from Treasury believes that the reason why self-assessment taxes were so low was due to the fact that those individuals who are highly paid are better able to arrange their affairs to avoid paying such a high rate.
While it is still early, this being the first year, it has been a disappointing start and there is some doubt as to the future success of the new self-assessment rate. With the extension of the filing date due to HMRC’s industrial action, it is premature to completely evaluate the success or failure of the ne 50% rate. A definitive assessment is expected prior to the Chancellor’s Budget in March.
