The Revenue and Growth Effects of Britain’s High Personal Taxes

Our research has found that the behavioural response to the new higher rates of tax is strong and that this is bound to hurt tax receipts. While many people saw the previous top rate of income tax as too high at 40%, most put up with it. The same cannot be said of the new 50% top rate (actually 52% after the extension of National Insurance payments), which on the evidence constitutes a tipping point. The policy risks flat growth over the next decade. It also risks a cumulative fall in tax receipts of £350bn or more over the same period.