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Labour has pledged to reintroduce the 50% tax band, which was cut to 45% by the coalition government in April 2013.

The previous Labour government originally created the top tax band in 2010, increasing the highest tax rate from 40p to 50p.

Labour unsuccessfully tried to block the abolition of the 50p rate in 2012.

Shadow chancellor Ed Balls has promised to reintroduce the 50p rate on earnings above £150,000 if Labour wins the next election in 2015.

A ‘fairer share of the burden’ or ‘anti-business’?

The 50p tax rate was originally introduced by Labour to help rescue the UK’s finances after the financial crisis.

Chancellor George Osborne reduced the top rate to 45p in 2012 saying that it “damages our economy”.

Promising to reintroduce the 50p rate, shadow chancellor, Ed Balls has said "those with the broadest shoulders" should bear a "fairer share of the burden".

Mr Balls said that it was a "fair" measure to be used while Labour reduced the "huge" deficit it would inherit if it won the 2015 election.

It is suggested that the 50p rate would remain in place until the budget deficit had been cleared, which Labour would aim to do by 2020.

Labour has not put a figure on how much the increased rate of tax would raise but believes that the impact would be greater than an original assessment suggested based on the number of people earning salaries at the top level.

An HMRC assessment in 2012 had suggested that the 2013 cut from 50% to 45% would cost £100m a year.

However, the assessment also said the high tax rate made the UK a "less attractive place to start, finance and grow a business".

Prime minister, David Cameron, has said that plans to reinstate the 50p rate are “anti-business, anti-investment and anti-growth” and David Gauke, Conservative Treasury minister, has said the 50p rate would "raise little, if anything”.

According to the BBC, more than 20 company bosses have written to the Daily Telegraph to condemn the plans.

Ed Balls has rejected claims that Labour's pledge to bring back the 50p top rate of income tax is part of an "anti-business agenda" in the party.

Your ‘taxable’ income includes earnings from employment, most pensions and savings interest, dividends, rental income and any income paid to you from a trust.

No tax is due on a personal allowance, which is £9,440 for 2013-14. The personal allowance is due to rise to £10,000 from April 2014.

Income of up to £32,010 is taxed at the ‘basic rate’ which is 20%.  A ‘higher rate’ of 40% applies to income from £32,011 to £150,000.

Income over £150,000 is currently taxed at 45%.

Make the most of your income

Got questions or worried you’re paying too much tax? Make the most of what you earn by paying the correct amount of tax for your circumstances.

Foremans can help! Whether you’re an existing client or just looking for some initial information, you can call our friendly team on 01244 625 500 for free initial advice.