The new 50p top rate of income tax is hugely significant.

Patrick Stevens, tax partner at Ernst & Young, tells me that it’s the highest band for 20 years in the UK.

Margaret Thatcher abolished the 60 per cent rate in 1987/88 and replaced it with the 40 per cent rate in 1988/89.

This is a hell of a long time ago. Incidentally, Bobby McFerrin was in the charts back then with “Don’t Worry Be Happy”. And Yazz with “The Only Way is Up“. Like I say: happy days. Kylie Minogue was also in the charts; thus the gratuitous photograph.

Meanwhile Stevens points out: “The increase in top rate of tax to 50 per cent moves the UK up from 19th to 7th in the table of highest marginal income tax rates amongst OECD countries. This contrasts strongly with recent trends across the OECD countries which have seen marginal tax rates decreasing.”

April 22, 2009 6:01pm in Economy | Comment