“Budget 2012: new tycoon tax in victory for Nick Clegg” – so reports the Daily Telegraph:
In a significant victory for the Liberal Democrats, the Chancellor effectively introduced a 25 per cent minimum rate of tax in the Budget.
Under the changes, he will limit how much people offset their tax bills by investing in businesses or donating to charity.
Anyone seeking to claim more than £50,000 of tax relief in any one year will have a cap set at 25 per cent of their income from 2013.
Accountants said this means the wealthiest will have to pay at least 25 per cent of their income in tax. Although the highest rate of income tax is 50 per cent, reducing to 45 per cent next year, some wealthy people reduce their bills to almost nothing using different reliefs available from HM Revenue and Customs.
The introduction of this major change to the tax system is one of the main reasons why, as I wrote yesterday, if you are on more than £150,000, you will pay an extra £1,300 a year in tax on average as a result of this Budget.
As for what Labour would do on the 50p rate they seem to be flip and flopping with each new interview – sometimes saying they would reintroduce it if they had the chance tomorrow/next week, and sometimes not.
For more on the Budget see a couple of the media interviews I did yesterday – first on the News Channel and then on Radio 4: