£145 allowance?

FairyElephant_2

Sorry if it is a dim question, but what does this 'increase the £120 allowance to £145' which the chanceloor has just announced actually mean in real ££££?

Thanks!

CLAPTON

it means that now the tax allowance is 5435 plus 120 =6035
it now becomes 5435 plus 145 = 6060 in april 2009

zarazara

5434 + 120 = 5554
5435 + 145 = 5580

Lokolo

They said they will only stop the 10p thing for another year. So in April 2010, will personal allowance then go down?

i.e. this April will be 6,060. Then April 2010 will go back down to 5,000 and something?

Also National Insurance is increasing... awesome...

Mathsguy

Essentially it means an extra £25 a year if you are a basic rate tax payer

CLAPTON

zarazara wrote: »

5434 + 120 = 5554
5435 + 145 = 5580

a bit to0 speedy

so now 5435 + 600 = 6035 i.e. a tax reduction of £120 (600x 20%)

this increases to give a tax cut of £145
i.e. tax allowaance will be 5435 + 600+125 = 6160 i.e. a tax reduction in total of £145 so only £25 better off in april compared to now.

Mikeyorks

A bit more ..... as the indexation figure is announced in the small print. So the current £6035 moves to £6475 wef April 2009 giving a reduction of £88 pa (on top of the existing £120 .... which would probably have disappeared had it not been for the current climate) for those paying @ 20%. From the HMRC site :-

Changes from April 2009

• The basic personal allowance for 2008/09 of £6035 will increase by indexation £310 plus a further £130 to £6475 from 6 April 2009. This is equal to a weekly amount of tax free income of £116.