We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
pension vs isa
Options
Comments
-
That might be arguable.
You may feel that the band at 20% has narrowed, but that's mostly because an increased zero band has been taken off the bottom. Because of that larger zero band, people on 40% tax have had a cut much like basic rate tax payers.
.. but in 2010/11, you paid 40% above £43,875. Then that went to £42,475, and down to £41,450 in 2013/14. Even the 2015/16 limit of £42,385 is >5% reduction in £terms and a lot more down in real terms.
Over the same period, the zero band has gone up a massive 64% from £6,475 to £10,600. Not complaining, but this is quite a massive transfer of tax burden from the lower paid to the 'middle' earners.... and so-called 'wealthy pensioners' for that matter.0 -
My notes suggest these values for the starting point for higher rate income tax:
year Hrfrom RPI real PerAllw real BRBand real BR TaxPd Tax20k Tax30k Tax40k Tax50k Tax60k Tax70k Tax80k Tax90k Tax100k Tax120k Tax240k 2005/6 37295 191.6 37295 4895 4895 32400 32400 22 7128 3323 5523 8210 12210 16210 20210 24210 28210 32210 40210 88210 2006/7 38335 196.5 37379 5035 5164 33300 32215 22 7087 3264 5464 8135 12135 16135 20135 24135 28135 32135 40135 88135 2007/8 39825 205.4 37149 5225 5601 34600 31548 22 6941 3168 5368 8081 12081 16081 20081 24081 28081 32081 40081 88081 2008/9 40835 214 36561 6035 6741 34800 29820 20 5964 2652 4652 7340 11340 15340 19340 23340 27340 31340 39340 87340 2009/10 43875 211.5 39747 6475 7148 37400 32599 20 6520 2570 4570 6621 10621 14621 18621 22621 26621 30621 38621 86621 2010/11 43875 222.8 37731 6475 7529 37400 30202 20 6040 2494 4494 6948 10948 14948 18948 22948 26948 30948 38948 95948 2011/12 42475 234.4 34719 7475 9145 35000 25574 20 5115 2171 4171 7227 11227 15227 19227 23227 27227 31227 41056 97611 2012/13 42475 242.5 33560 8105 10258 34370 23302 20 4660 1948 3948 7236 11236 15236 19236 23236 27236 31236 41288 97556 2013/14 41450 249.5 31831 9440 12293 32010 19538 20 3908 1541 3541 7176 11176 15176 19176 23176 27176 31176 41634 93653 2014/15 42285 255.7 31685 10000 13346 32285 18339 20 3668 1331 3331 6994 10994 14994 18994 22994 26994 30994 41663 93584 2015/16 43280 257.5 32204 10500 14111 32780 18093 20 3619 1178 3178 6737 10737 14737 18737 22737 26737 30737 41560 93453 51 35 58 82 88 91 93 94 95 95 103 106
RPI is from April except 2015/16 which is from December 2014. So the real, inflation-adjusted, start of higher rate income tax is now to be less than 86.3% of where it was in 2005/6.
The basic rate band is narrower in real terms, about the same nominal, and at all income levels from £40k up to £100k the real income tax level is lower than it was ten years ago. But don't forget VAT and National Insurance rates as well as duties.
If you look at the percentage line you'll see the huge drops in real tax to 35% and 58% at the lower 20k and 30k income levels, with much smaller drops at the higher end, in the 90%+ range from 60k up.
Hrfrom: where higher rate starts, nominal Pounds
RPI: retail price index
real: inflation adjusted previous number, either HR threshold, personal allowance or basic rate band
PerAllw: personal allowance
BRBand: basic rate tax band
BR: basic rate of income tax
TaxPd: total income tax paid at the higher rate threshold, real
Tax40k etc.: total income tax paid at that income level, real, meaning increasing with RPI each year
%change: how much the income tax is to be in 2015/16 as a percentage of 2005/60 -
If you want to know which government to give the credit or blame to, here's a table showing the percentage real income tax at each level for each tax year:
year Tax20k Tax30k Tax40k Tax50k Tax60k Tax70k Tax80k Tax90k Tax100k Tax120k Tax240k 2005/6 100 100 100 100 100 100 100 100 100 100 100 2006/7 98 99 99 99 100 100 100 100 100 100 100 2007/8 95 97 98 99 99 99 99 100 100 100 100 2008/9 80 84 89 93 95 96 96 97 97 98 99 2009/10 77 83 81 87 90 92 93 94 95 96 98 2010/11 75 81 85 90 92 94 95 96 96 97 109 2011/12 65 76 88 92 94 95 96 97 97 102 111 2012/13 59 71 88 92 94 95 96 97 97 103 111 2013/14 46 64 87 92 94 95 96 96 97 104 106 2014/15 40 60 85 90 92 94 95 96 96 104 106 2015/16 35 58 82 88 91 93 94 95 95 103 106
As you can see, at the lower end the current government has implemented a huge income tax cut, more than halving the real income tax bill compared to the end of the last Labour government, from 77% to just 35% of its level ten years ago on £20k real income. Tax credits and such not included.
Since the median average income for pensioner households is around £18,000 and income has some split between two people in a lot of cases, this is a huge income tax cut for both typical pensioners and lowish earners.0 -
As you can see, at the lower end the current government has implemented a huge income tax cut, more than halving the real income tax bill compared to the end of the last Labour government
What, those lower-than-vermin Tories, and their vile LibDem running dogs? Say it ain't true!
Still, two-Eds-are-worse-than-one will reverse this neoliberal abomination.Free the dunston one next time too.0 -
Regrettably I cannot lie so must mention that not only have there been income tax cuts particularly at the bottom, the last Labour government with its 50% tax rate increased tax above previous levels at above 150k and the current government increased it on those above 100k, while decreasing the above 150k increase a bit.What, those lower-than-vermin Tories, and their vile LibDem running dogs? Say it ain't true!
We appear to live in a strange world where the verminous and their lackeys have cut income tax for low earners more than Labour's abominable rule and also increased income tax on more above 100k earners than Labour did. Then there's that flat rate state pension which increases the state pension for low and non-workers by taking it away from those with long working histories.
I'm not sure where the looking glass has been hidden but we appear to have passed through it.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.2K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.2K Work, Benefits & Business
- 599.3K Mortgages, Homes & Bills
- 177K Life & Family
- 257.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards