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This dissertation was done as part of my undergraduate degree at Thames Valley Universiy. The main motive of this work is to establish the degree to which various income groups are affected by the UK system of taxation. Also, the aim is to ascertain whether the taxation system provides incentives to people to work or to claim benefits. At the time of doing this project, the 50% tax on high earners was being introduced in the UK. This project performed a critical analysis of the implications of this high rate of tax.