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Pre Budget Report: 50p tax on each pound of salary over 150,000, Government confirms

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High-earners will have to pay 50p tax on each pound of their salary more than 150,000, the chancellor of the Exchequer confirmed.

In his Pre Budget Report, Alistair Darling confirmed he would not be making any changes to income tax already announced in March this year.

This comes despite rumours that employees earning £100,000 or more could see tax hikes from the current level of 40% on their higher earnings.

But Darling said: "I will impose tough anti-avoidance measures. We will be tough but fair and the biggest burden will fall on those with the broadest shoulders."

But the Pre Budget Report speech did not contain any announcement about increasing capital gains tax from 18% as had been mooted in the national newspapers.

Sarah Pickering, managing director of tax advisory firm Alvarez & Marsal Taxand, said: "It's a relief that small business owners and entrepreneurs have not been prevented from legitimate capital tax planning, so they can continue to benefit from the lower capital tax rate. High earners now have an incentive not to transfer their assets overseas, which will be good for the UK economy."

In addition, from April 2011, employees' National Insurance Contributions will rise to 1.5% from 1% although those earning less than £20,000 per annum will be protected from the increase.

The chancellor confirmed VAT will increase to 17.5% in January 2010 but there will be no further changes.