Emergency Budget: how the huge tax shake-up affects you

Former_MSE_Guy · 22 June 2010 at 12:01PM

This is the discussion thread for the following MSE News Story:

Read the full story:

Marc_UK · 22 June 2010 at 9:32PM

Firstly, this is my first post and I'm hoping that this is an appropriate place for this thread.

The budget contained projections for the reduction of the Public Sector Net Borrowing (PSNB) for the coming years.

Can anyone please explain what these figures actually mean??

I'm also trying to understand what the monetary figure is for our national debt, and how the projected PSNB figures affect this??

It seems as though by 2015 we are not actually reducing our national debt level, however from that point forward our public expenses will balance with our income - This may be a complete mis-understanding!!!

It would be great if someone could try and explain this for me in plain (non-accountant) language....

Many thanks..

liz545 · 22 June 2010 at 10:28PM

I'm unclear on the two-year wage freeze for public sector workers - I'm assuming this means local as well as central gov't staff. Is this likely to include promotion/individual appraisal payrises as well as the annual cost of living/inflation linked increase?

Mikeyorks · 22 June 2010 at 10:52PM

It's certainly likely to hit 'appraisal' increases, which are generally a proportion of the annual pay rise pot. But it can't hit promotion increases - but the double jeopardy is that they're likely to be impacted by the 25% reduction in Dept budgets (outside Health / overseas aid) predicted in the Spending review later this year :-

_Budget_document wrote:

Based on these implied DEL figures, and once the Government’s commitments on protecting health and overseas aid are taken into account, other departments could see average real cuts to their budgets of around 25 per cent over the four years

chriscfox · 23 June 2010 at 8:58AM

In your article you note that the income at which we will start paying the higher (40%) rate of tax is to be reduced but that this will not be announced until the Autumn.

However, in the BBC/KPMG tax calculator, they already seem to have factored this effect in. Do they know something that you / we do not, or have I misunderstood what you said?

Many thanks,
Chris

John_Pierpoint · 23 June 2010 at 2:13PM

I think the tax is agreed - it is the exact situation for National Insurance that will be fixed in the autumn statement.
(Divide and Rule)

chriscfox · 23 June 2010 at 2:15PM

Thanks John, I spotted it in the detail in the budget document itself. Strangely, this does not seem to get mentioned in the summaries I have been reading.

Premier_2 · 25 June 2010 at 8:21AM

VAT hike
...Some estimates have suggested the hike will cost households around £500 a year...

By my calculation, to cost £500 more due to the increase in standard rate vat, it means the average household is spending £23,500 p.a on standard rated vatable items.

Bearing in mind, much of an average households income probably goes on items unaffected by the change in the standard rate of vat (e.g. mortgage/rent, gas, electric, water, (most) foodstuffs, council tax, etc), what is the average household annual income?

Mikeyorks · 25 June 2010 at 10:24AM

Premier wrote: »

By my calculation, to cost £500 more due to the increase in standard rate vat, it means the average household is spending £23,500 p.a on standard rated vatable items.

Obviously the 'some estimates' journalist envisages a new car per annum?

I personally expect my VAT increase to be subsumed within the £200pa freed up by the £1k increase in personal allowances.

Emergency Budget: how the huge tax shake-up affects you

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