Alistair Darling unveils 50 per cent tax rate in UK Budget 2009

Alistair Darling unveils 50 per cent tax rate in Budget 2009

A new 50 per cent top rate of income tax has been announced in the Budget by Alistair Darling, the Chancellor.

By Jon Swaine and Angela Monaghan
Last Updated: 1:43PM BST 22 Apr 2009


The rate will apply to earnings above £150,000 and will replace the 45 per cent rate unveiled in the pre-Budget Report last November. It will take effect from next April - a year earlier than had been planned for the 45p rate.

Personal allowances will also be fully withdrawn for those with incomes over £100,000 from next April.


Tax relief will be reduced on pensions earnings above £150,000, Mr Darling added. However, the basic state pension and the Winter fuel allowance will both continue to rise.

The decisions came as Mr Darling announced the most important budget for a generation, aimed at tackling the worst recession since the Second World War.

Outlining the scale of the problem, Mr Darling announced that he expects that the economy will contract by about 1.6 per cent during the first quarter of this year, and that GDP growth will be about -3.5 per cent for the year.

The recession has forced the Chancellor to rip up his economic forecasts made in the Pre-Budget Report in November, in which the economy was expected to contract by just 1.25 per cent.

In contrast to more pessmistic forecasts from the City, Mr Darling said that he expected the economy to start growing again towards the end of this year, before growing by about 1.25 per cent in 2010 and 3.5 per cent in 2011.

The Chancellor also admitted that Government borrowing will soar to £175bn in the current financial year, or 12 per cent of the country's gross domestic product. The recession has torn a hole through Britain's public finances as tax receipts collapse and spending on benefits such as unemployment rise.

Inflation is expected to continue falling sharply, Mr Darling said, reaching about 1 per cent on the Government's preferred measure by the end of this year. Deflation will continue to be shown on the RPI measure, he added. It is set to fall to about -3 per cent by September, before moving back above zero next year.

A widely-trailed car scrappage scheme will be implemented next month to provide motorists with a £2,000 discount on new vehicles bought when they trade in cars over 10 years old, Mr Darling announced. The scheme will end in March 2010.

Mr Darling also announced a blitz of measures to stop UK unemployment spiralling higher as the recession bites. An additional £1.7bn was pledged to support the unemployed.

From January everyone under the age of 25 who has been jobless for 12 months will be offered a job or a place in training with additional money on top of benefits for those in training.

The "stamp duty holiday" on properties sold for less than £175,000 is to be extended until the end of the year, Mr Darling announced.



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