Chancellor urged to scrap 50p tax rate

Business leaders have written to the Chancellor urging him to scrap the 50p higher tax rate to attract entrepreneurs to the UK and boost confidence.

In the letter, which was published in The Daily Telegraph today, 30 of the City's top figures, including Sir Nigel Rudd, the chairman of BAA, the airports operator and Harvey McGrath, the chairman of Prudential, also call for an increase in the tax-free personal allowance.

They are calling for the personal allowance to increase to £9,000 in 2012, £1,000 more than is currently planned.

The letter says: "We would encourage an acceleration of the Government's commitments on two areas of tax policy: increasing the personal allowance and restoring 40 per cent as the top rate of income tax.

"An early removal of the temporary 50 per cent tax rate would attract wealth generators to the UK and support the entrepreneurs we need to help us grow the economy and provide jobs.

"We await the conclusions of the HM Revenue and Customs evaluation of the sums raised by the 50 per cent rate. However, we are confident that the cost to the Treasury, if any, in the short term will not be material and that the advantages over the life of this Parliament in terms of generally increased economic activity will more than outweigh any direct costs."

The Chancellor is making his Autumn Statement on 29th November, and whether these recommendations will be made remain to be seen.

Business groups are also calling for numerous business boosting measures to be made, including national insurance holidays for firms that take on the young unemployed, and a reform of the Research and Development tax credits.