Britain mulling cut in top tax rate to boost growth

UK Chancellor George Osborne is putting the finishing touches to his budget today amid claims he is prepared to cut the 50p top rate of tax.

Downing Street insisted the claims that the levy on earners over £150,000 (€180,00) would be reduced to 40p were “speculation” but government sources have confirmed the Chancellor is set to introduce a “Downton Abbey” tax break for the television industry.

Details of the Government’s statement are set to go to the Office of Budget Responsibility (OBR) today to allow the independent body to work out its official forecasts.

According to The Guardian, Mr Osborne is set to push ahead with a reduction in the 50p rate after analysis found the levy is reaping far less for the Exchequer than expected.

A preliminary study, due to be published next week, is to show the tax on the highest earners is bringing in hundreds of millions, not the £2.6bn predicted, the newspaper said.

Mr Osborne has come under intense pressure from business leaders, as well as many in his own party, to slash the top rate of income tax amid claims it deters money-makers from being based in the UK. But some senior figures fear it would be politically dangerous to cut levies on the highest earners at a time of austerity.

One industry that is set to benefit from next week’s statement is high-end television production.

Shows like 'Downton Abbey' could benefit from a tax break worth tens of millions of pounds a year under plans expected to be announced in the March 21 Budget.

The Chancellor is expected to announce a consultation on extending to cinematic-style TV production the existing tax relief worth £100m a year to the UK film industry.

TV companies could see their corporation tax burden reduced by around 20%-25% as a result of the changes being considered.

Mr Osborne hopes to help British companies compete in the increasingly popular market for film-standard TV series, until now dominated by US hits like 'Mad Men' and 'The Wire'.

It is understood the relief will be aimed at “culturally British” programming to help support shows distinctive to the UK for export to the rest of the world.

“One of the ways the world sees Britain at its best is through world-class films and television made in Britain,” said a Treasury source.

“They not only help us showcase the country but are also an important part of a dynamic and diversified economy.

“Tax relief for British films has been critical in ensuring that the industry continues to thrive.”