Inflation still hitting 50 per cent tax bracket

People in the 50 per cent tax bracket are still being hit by inflation, despite the fact that the consumer price index (CPI) fell during January. The CPI dipped from 4.2 per cent at the end of 2011 to 3.6 per cent by last month thanks to cheaper utilities and petrol prices. Economist reckon that inflation will continue to ease off now that VAT calculations have been dropped from the annual comparisons. In fact, inflation is expected to reach the Bank of England's two per cent target by the end of the year. But at the moment, the dip in prices is not enough to make up for poor returns on investment. According to figures from the Financial Times, people on the top 50 per cent tax rate would have needed to source income of 7.2 per cent on their investments if they wanted to see a real return over the course of the past year. Basic-rate tax payers have also been affected, although they would have needed a slightly more achievable 4.5 per cent return on investments if they wanted to see any real returns.

http://www.50percenttax.co.uk/index/2012/2/16/inflation-still-hitting-50-per-cent-tax-bracket.html