Sources · A 60% top tax rate
This house would raise the top rate of income tax to 60%.
Fact bank v1 · 12 cards
- TT-01True
“Britain had a 60% top rate of income tax under Margaret Thatcher.”
Confirmed: the top tax rate on earnings was 83% until 1979. Margaret Thatcher's government cut it to 60% in 1979, and then to 40% in 1988.
So a 60% top rate would not be new for Britain. It lasted for most of the 1980s. A 50% rate was added in April 2010 for incomes over £150,000, and it was cut to 45% in April 2013. Today the 45% rate starts at £125,140.
“up to 1978, the top METR on earnings was 83%. Under the Thatcher administrations, the top rate dropped to 60% in 1979”
House of Commons Library·Income tax: the additional 50p rate (House of Commons Library briefing SN00249)Government / parliament · 26 Sept 2018 ↗Further sources for this card
- TT-02True
“The richest 1% already pay more than a quarter of all income tax.”
Confirmed: in 2023-24, the top 1% of income taxpayers paid about 27.2% of all income tax. They got 12.4% of all income before tax.
They pay a big share because they earn so much more than most people, and higher slices of income are taxed at higher rates. The figures cover income tax only, not other taxes like VAT, and only count people who pay income tax. Back in 1999-2000, the top 1% paid 21.3% of all income tax.
“The top 10% of Income Tax payers were liable for around 59.1% of total Income Tax, while the top 1% were liable for around 27.2%.”
HM Revenue & Customs·Income Tax liabilities statistics: tax year 2023 to 2024 to tax year 2026 to 2027 (commentary)Government / parliament · 15 Jul 2026 ↗ - TT-03True
“Only around 2 or 3 in every 100 taxpayers pay the top rate of income tax.”
Confirmed: in 2023-24, 893,000 people paid the top (additional) rate. That was 2.4% of income taxpayers. HMRC expects 1.29 million, or 3.2%, in 2026-27.
The number is growing because the point where the top rate starts was cut from £150,000 to £125,140 in April 2023 and then frozen. As pay rises, more people cross that line. So a higher top rate starting at the same point would hit a small group, but one that is getting bigger.
“5.76 million (15.7%) higher rate Income Tax payers, and 893,000 (2.4%) additional rate Income Tax payers”
HM Revenue & Customs·Income Tax liabilities statistics: tax year 2023 to 2024 to tax year 2026 to 2027 (commentary)Government / parliament · 15 Jul 2026 ↗ - TT-04Mostly true
“The 50p top rate raised far less money than expected.”
Mostly right: HMRC expected the 50p rate to raise around £2.5 billion. Its 2012 study estimated it raised around £1 billion or less, and said it might even have lost money. But the study used only one year of tax returns, so it is uncertain.
Before the 50p rate started in April 2010, people moved about £16 billion to £18 billion of income into the year before to avoid it. Using the same evidence, HMRC said cutting the rate to 45p would cost only about £100 million a year. The IFS said HMRC's estimate was very uncertain, but in line with earlier studies.
“the underlying yield from the additional rate is much lower than originally forecast (yielding around £1 billion or less)”
HM Revenue & Customs·The Exchequer effect of the 50 per cent additional rate of income taxGovernment / parliament · 21 Mar 2012 ↗ - TT-05Mostly false
“The 50p rate actually raised £10 billion more than expected.”
The £10 billion came from comparing two sets of HMRC projections for 2010-11 to 2012-13. The older set was based on 2009-10, the year before the 50p rate began. The IFS found little sign that the 50p rate raised more than HMRC had estimated.
Labour's Ed Balls made this claim in 2014. The IFS pointed out that HMRC's study had already used real 2010-11 tax returns, so the newer figures did not show the rate worked better. The IFS also said HMRC had worked fast with just one year of data, so the 50p rate might have raised somewhat more than HMRC thought.
“So in fact there is little additional evidence to suggest that a 50p rate would raise more than was estimated by HMRC back in 2012.”
House of Commons Library·Income tax: the additional 50p rate (House of Commons Library briefing SN00249)Government / parliament · 26 Sept 2018 ↗ - TT-06Mixed
“A 60% top rate would bring in less money than today's rate.”
Nobody knows for sure. In 2012, HMRC's best guess was that the most money would come from a top rate between 45% and 50%, which points that way. But experts say these estimates are very uncertain.
It all depends on how much people change what they do when tax goes up, and that is hard to measure. The Mirrlees Review, a big IFS study, put its best guess at an income tax rate of 40%, once National Insurance and taxes on spending are counted. But it said there was only a two-thirds chance the real answer was between 33% and 57%. Later IFS research found people earning £150,000 to £200,000 reacted only a third to a half as much as the whole group earning over £150,000.
“the estimated revenue-maximising rate of tax for those with incomes over £150,000 is between 45 per cent and 50 per cent”
HM Revenue & Customs·The Exchequer effect of the 50 per cent additional rate of income tax (Annex A, Laffer curves)Government / parliament · 21 Mar 2012 ↗ - TT-07False
“Each extra penny on the top rate of income tax would raise billions of pounds.”
HMRC estimates that adding 1p to the top rate would raise about £145 million in 2026-27 and £265 million in 2027-28. That is millions, not billions. By comparison, 1p on the basic rate would raise about £6.9 billion in 2026-27.
The top rate raises less per penny partly because far fewer people pay it. HMRC's figures already allow for people changing what they do, such as setting up a company to pay less tax. HMRC warns the figures are very uncertain for top-rate taxpayers.
“There is significant uncertainty around these modelling assumptions, particularly concerning rate changes to the Income Tax and National Insurance Contributions of Additional Rate taxpayers.”
HM Revenue & Customs·Direct effects of illustrative tax changes bulletin (June 2025), section 5: Income Tax ratesGovernment / parliament · 24 Jun 2025 ↗Further sources for this card
- TT-08True
“Some people in Britain already pay a 60% rate of income tax.”
Confirmed: on income between £100,000 and £125,140, people lose £1 of their tax-free allowance for every £2 they earn. Added to the 40% rate, that means 60p of each extra pound goes in income tax.
Employees also pay 2% National Insurance at that level, so the total is 62p in every extra pound. Above £125,140 the rate falls back to 45%, plus National Insurance. Experts have long said this gives people in this band a strong reason to pay more into a pension, which lowers their taxed income. These are the rates outside Scotland, which has its own income tax bands.
“Your personal allowance goes down by £1 for every £2 that your adjusted net income is above £100,000.”
GOV.UK (HM Revenue & Customs)·Income Tax rates and Personal AllowancesGovernment / parliament · 6 Apr 2026 ↗ - TT-09Mostly true
“When countries cut their top tax rates, the richest 1% took a bigger share of the income.”
Mostly right: a study of 18 rich countries since 1960 found that lower top tax rates went with a bigger share of income for the top 1%. That shows the two go together, but on its own it does not prove one caused the other.
The authors say the evidence fits the idea that low top rates give bosses more reason to push for bigger pay. They found bosses' pay was higher in countries with lower top tax rates, even after allowing for how well firms did. Part of the link may also be rich people working more, or hiding less of their income, when taxes are low.
“there is a strong negative correlation between top tax rates and top 1% income shares since 1960”
National Bureau of Economic Research·Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities (NBER Working Paper 17616)Independent research institute · 1 Mar 2013 ↗ - TT-10Mixed
“Cutting top tax rates makes the economy grow faster.”
The evidence is split. A study of 18 rich countries since 1960 found that cuts in top tax rates went with a bigger share for the top 1%, but not with faster growth. Other studies, including one by the OECD, found steeply rising income taxes can hold the economy back.
HMRC's 2012 review of the evidence said these results should be treated with caution. Growth depends on many things at once, so it is very hard to pin an effect on one tax rate.
“Top tax rate cuts are associated with top one percent pretax income shares increases but not higher economic growth.”
American Economic Journal: Economic Policy (American Economic Association)·Optimal Taxation of Top Labor Incomes: A Tale of Three ElasticitiesPeer-reviewed research · 1 Feb 2014 ↗ - TT-11Mixed
“If you raise the top rate, rich people will just leave the country.”
Some do, but it depends a lot on who they are. Studies found strong moves by top footballers and by highly paid foreign workers. A major review says results vary a great deal, and warns against over-using them as a reason to tax the rich less.
In Denmark, a special low tax rate for highly paid newcomers doubled the number of them, compared with foreign workers paid slightly less. Footballers from abroad reacted to tax far more than home-grown players. The review found the people most likely to move are high earners whose skills work anywhere. HMRC said in 2012 that people leaving the UK because of a higher rate could take years to show up.
“especially high-income workers and professions with little location-specific human capital, may be quite responsive to taxes in their location decisions”
Journal of Economic Perspectives (American Economic Association)·Taxation and Migration: Evidence and Policy ImplicationsPeer-reviewed research · 1 May 2020 ↗Further sources for this card
- National Bureau of Economic Research · Migration and Wage Effects of Taxing Top Earners: Evidence from the Foreigners' Tax Scheme in Denmark (NBER Working Paper 18885) ↗
- American Economic Association · Taxation and International Migration of Superstars: Evidence from the European Football Market (American Economic Review, 2013) ↗
- HM Revenue & Customs · The Exchequer effect of the 50 per cent additional rate of income tax (March 2012), executive summary ↗
- TT-12Mostly false
“A higher top rate would mainly make high earners work less.”
UK studies found the biggest reactions were people moving income between years or taking it in other ways, especially company owners. Pay from jobs changed much less. When the 50p rate came in, about £16 billion to £18 billion of income was moved into the year before.
Company owners can choose when to pay themselves dividends, so they can time their income around tax changes. IFS research found employees hardly reacted at all to tax thresholds. The Mirrlees Review said the big reactions at the top are not mainly about working fewer hours, but about finding other ways to pay less tax. Economists say taxing all kinds of income in the same way, and enforcing the rules, makes it harder to avoid tax like this.
“individuals with dividend incomes, such as owner-managers of incorporated businesses, are more responsive to changes in tax rates than those with employment income”
House of Commons Library·Income tax: the additional 50p rate (House of Commons Library briefing SN00249), quoting IFS research from 2017Government / parliament · 26 Sept 2018 ↗
The judge is an AI model. It can only rule on claims these cards cover. Everything else stays unverified, and it never rules on opinions. See every motion's cards.