Sterling exchange rates: Economic indicators
Sterling often changes in value relative to other currencies. Find the latest data on exchange rates overall and against the dollar and euro.

In the 2009 Budget the Labour Government announced the introduction of a new 'additional' 50p rate on incomes above £150,000 from April 2010. This paper discusses the background to the 50p rate, the debate over its political significance and its economic impact, before looking at the Coalition Government’s decision to cut the additional rate to 45p, and recent speculation as to its future.
Income tax: the additional 50p rate (1 MB , PDF)
In his 2009 Budget, the then Chancellor, Alistair Darling, announced several tax increases to “raise over £6 billion by 2012, to secure our economic future and to provide help for people now when they need it most.” These changes included increases in the rates of indirect taxes – such as duties on road fuel and alcohol – for the current tax year, and changes to income tax from April 2010, including a new 50p rate on incomes above £150,000. The new 50p rate dominated reactions to the Budget, as many saw it as a major change in the Labour Government’s approach to taxing the wealthy. There was also much discussion as to whether the change would raise as much as the Government estimated: £1.3 billion in 2010/11, rising to £3.05 billion in 2011/12.[1] HM Revenue & Customs estimate that 236,000 individuals paid the 50p rate in 2010/11, compared to the total taxpayer population of 31.3 million.[2]
The new Conservative-Liberal Democrat Government did not mention the 50p rate in the agreement underpinning the Coalition, though it announced that the personal allowance would be increased in the forthcoming Budget “to help lower and middle income earners” as the first of a series of “real terms steps each year” toward setting the allowance at £10,000.[3] In his first Budget on 22 June 2010, the Chancellor George Osborne confirmed that the personal allowance would rise by £1,000 to £7,475 from April 2011, while the Budget report noted that the 50p rate would “remain in place for the time being.”[4] In his second Budget on 23 March 2011 the Chancellor made no changes to the rates of income tax for the coming year but underlined his view that the 50p rate “would do lasting damage to our economy if it were to become permanent” and said he had asked HMRC to review “how much revenue it actually raises.”[5]
In his Budget on 21 March 2012 Mr Osborne announced the additional rate would be cut to 45p from April 2013. HMRC had found evidence of considerable ‘forestalling’ – taxpayers shifting income into the previous tax year to avoid the 50p rate – “at a cost to the taxpayer of £1 billion”, and, in his words, “no Chancellor can justify a tax rate that damages our economy and raises next to nothing.”[6] HMRC’s assessment of the impact of the 50p rate was set out in a detailed report, which estimated that the cost of cutting the rate to 45p would be only £100m by 2014/15, given the anticipated response by taxpayers to the new rate.[7] Although the Chancellor’s announcement was quite controversial, the Government implemented this rate change as proposed.
The additional rate remains set at 45p.[8] In answer to a PQ in January this year Treasury Minister Mel Stride cited HMRC’s assessment as showing “that the 50p rate was a distortive and economically inefficient way of raising revenue and it did not raise what was expected”, adding, “there has been no new evidence to suggest the conclusions of this report were incorrect.”[9]
HMRC estimate that 393,000 individuals will pay the additional rate in 2018/19. In this year it is estimated that 31 million people will pay income tax.[10] HMRC also estimate that total income tax liabilities in this year will total £185 billion; additional rate taxpayers’ liabilities are estimated to be £56.4 billion, about 30% of the total.[11]
Notes:
[1] HC Deb 22 April 2009 c244; Budget 2010, HC 451, March 2010 p140 (Table A11 : item l)
[2] HMRC, National Statistics: Number of individual income taxpayers (Table 2.1), May 2018
[3] HM Government, The Coalition: our programme for government, 20 May 2010 p30. See also, Income tax : increases in the personal allowance (2010-15), Commons Briefing Paper 6569, 17 June 2015.
[4] HC Deb 22 June 2010 c179; Budget 2010, HC 61, June 2010 p32 (para 1.97)
[5] HC Deb 23 March 2011 c957. See also, HC Deb 14 September 2011 c1191W
[6] HC Deb 21 March 2012 cc805-6. The Coalition Government confirmed that the additional rate would be 45% for 2013/14 in the Budget the next year (Budget 2013, HC 1033, March 2013 para 1.202-3).
[7] HMRC, The Exchequer effect of the 50 per cent additional rate of income tax, March 2012 pp48-53. The report estimated that the ‘static cost’ of this tax cut, with no allowance for any behavioural response, would be £3.35 billion in 2014/15. See also, Budget 2013, HC 1033, March 2013 p66 (Table 2.2 – item t)
[8] For details of tax rates and allowances for 2018/19 see, HM Treasury, Overview of tax legislation & rates (Annex A), November 2017.
[10] HMRC, National Statistics: Number of individual income taxpayers (Table 2.1), May 2018
[11] HMRC, National Statistics: Income Tax liabilities, by taxpayer’s marginal rate (Table 2.6), May 2018
Income tax: the additional 50p rate (1 MB , PDF)
Sterling often changes in value relative to other currencies. Find the latest data on exchange rates overall and against the dollar and euro.
Monetary policy affects the amount of money in the economy and the costs of borrowing. Find the latest data on interest rates in the UK, US and Eurozone.
Inflation measures the change in prices over time. Find the latest data on inflation in the UK, the Eurozone, and selected EU countries.