Budget 2010: What it means for you

Robboseven

CPJames19 wrote: »

What happened to help for Married couples?

Current inflation is running at 3% and predicted to rise to 6% by the end of the year. What happened to help for working people? With frozen income tax allowances and a 1% rise in NI contributions these two stealth tax rises alone will make the average working person between 4% and 7% worse off.

Maybe if MP's were prepared to repay the capital gains they made from taxpayer-funded property speculation and possibly waiver their golden goodbye payments we might be more inclined to listen to their inane drivel about helping out the ordinary man. What a self serving arrogant mob they are.

GW65

Maybe my maths is dodgy...but there seems to have been very little mention of one of the changes for 2010-11 which creates a 60.5% marginal tax rate!

For income above £100,000 the personal allowance is reduced by £1 for every £2 earned above the threshold. So if you earn £100,001 you pay your regular tax and NI on that £1 (i.e. 40.5p), plus you lose 50p tax free allowance and so pay 40% tax on that (20p), giving a grand total of 60.5p and hence 60.5%!

As ever, the Devil's in the detail...and the focus is on the 50% rate for people earning over £150,000 rather than this ridiculous marginal rate for people earning just over £100,000.

I included NI because if it looks like a tax and smells like a tax, it is a tax.

robsmg

Catscribe wrote: »

I know its a long-shot but... do you think there'll be anyway of those first time buyers who purchased between 1 Jan and today getting back the stamp duty they had to pay during this short period the threshold dropped back down?

I expect I know what my answer will be... and I know the way I'll be making myself heard - by talking with my vote.

When he released the information in the budget he did say from midnight tonight, don't think they would entertain the idea of giving people the money back they have paid.

John_Pierpoint

Robboseven wrote: »

Current inflation is running at 3% and predicted to rise to 6% by the end of the year. What happened to help for working people? With frozen income tax allowances and a 1% rise in NI contributions these two stealth tax rises alone will make the average working person between 4% and 7% worse off.

Maybe if MP's were prepared to repay the capital gains they made from taxpayer-funded property speculation and possibly waiver their golden goodbye payments we might be more inclined to listen to their inane drivel about helping out the ordinary man. What a self serving arrogant mob they are.

The reality is that even in sterling terms the GDP of this country fell 6% making the country 6% poorer. So that is £1.20 chopped off the true value of every £20 note. Hence the rush to gold.
Foreigners, who have been "subbing" us during the "good" times, 'cos they thought we were oil sheiks, have already chopped a fiver off £20 in anticipation of worse to come.
Obviously this poverty has to be shared out.
The "soft" way out is inflation, but in a global economy that will have us joining the PIIG club (Portugal/Ireland/Italy/Greece).
Are you paying your share?
As a pensioner I am definitely paying mine - just check out the artificially low interest rates on savings.

Debt_Free_Chick

GW65 wrote: »

Maybe my maths is dodgy...but there seems to have been very little mention of one of the changes for 2010-11 which creates a 60.5% marginal tax rate!

For income above £100,000 the personal allowance is reduced by £1 for every £2 earned above the threshold. So if you earn £100,001 you pay your regular tax and NI on that £1 (i.e. 40.5p), plus you lose 50p tax free allowance and so pay 40% tax on that (20p), giving a grand total of 60.5p and hence 60.5%!

As ever, the Devil's in the detail...and the focus is on the 50% rate for people earning over £150,000 rather than this ridiculous marginal rate for people earning just over £100,000.

I included NI because if it looks like a tax and smells like a tax, it is a tax.

Agreed, but it's worse than that ....

Take someone with a basic salary of £98,000 pa. They're not affected by this change, so each month they get the benefit of one-twelfth of their PA.

Then, in March 2011, they get a bonus of £10k and shares awarded in previous years vest, to the value of £10k.

What happens here is that the whole year's PA is taken away from them in one month!!!!!!!!!

We will have exactly this situation where I work. It will feel as though they haven't received a bonus!

Frozenace

Fair enough, though the money has to come from somewhere to pay off the deficit.

People on 100k+ salaries shouldn't really care that they lose a few hundred a month on the PA...

If you have a massive mortgage on tracker rate, you're saving 100s if not thousands a month because of interest rate policy.

You can't really have it all, can you?

Debt_Free_Chick

Frozenace wrote: »

Fair enough, though the money has to come from somewhere to pay off the deficit.

People on 100k+ salaries shouldn't really care that they lose a few hundred a month on the PA...

If you have a massive mortgage on tracker rate, you're saving 100s if not thousands a month because of interest rate policy.

You can't really have it all, can you?

I understand this point (I don't earn £98k a year, but I work in HR/Remuneration for an organisation where 1/3 of our people are paid more than £100k).

However, it remains that the more you earn, the more tax you pay. That's the case in the current tax year, as 40% of £60k (for someone earning roughly £100k) is more than 20% of £30k.

This Government, however, is specifically targetting the high-earners in a skewed manner. You earn more, you're taxed more; but we're going to tax you even more. And these are the people that make crucial decisions in the companies on which the future health of UK PLC depends. "Squeeze 'em til the pips squeak" springs to mind. Why?

The Personal Allowance has already been frozen. But for those earning more than £100k it's being taken away altogether (progressively). These are actually ordinary folk. They have commitments like you and I and they will find that they have less income to meet commitments next year.

Having said that, the low/middle earner is hit as well. Personal Allowances have been frozen; Pay increases are (largely) frozen. The net effect is that we'll be paid less this year than we were last year.

I have no problem with the basic motive of having to raise taxes to pay for the Country's operation. But - by definition - those taxes can only come from those who work. To concentrate or double-penalise the high-earners is simply not equitable. The pain has to be shared.

Frozenace

In an ideal world that would be the way.

I read a report somewhere that high earners are much more likely to seek tax efficiencies and make use of all the schemes, ISA, cap gains etc etc.

In this country, Financial services account for 15% of GDP, the majority in London alone.

Yet, lots of high earners pay less tax % than front line public services staff...

Lots of stimulus money has been pumped into the banks to prop them up, and yet their staff think that shorting UK Plc and profiteering from the recession is a birth right.

It's no wonder that they get taxed beyond compare.

Also, if you're a company owner, just pay yourself less and re-invest.

John_Pierpoint

Debt_Free_Chick wrote: »

I have no problem with the basic motive of having to raise taxes to pay for the Country's operation. But - by definition - those taxes can only come from those who work. To concentrate or double-penalise the high-earners is simply not equitable. The pain has to be shared.

But - by definition - those taxes can only come from those who work and those prudent enough to have saved and invested.

zygurat789

John_Pierpoint wrote: »

But - by definition - those taxes can only come from those who work and those prudent enough to have saved and invested.

Taxes are levied when money changes hands, whether it be for earning or spending, therefore, the spendthrift pays, arguably, mor tax than the saver. The former paying tax on the whole amount whilst the latter only
pays tax on the income generated from the whole amount.

QUOTE
The Personal Allowance has already been frozen. QUOTE

In actual terms yes, but in real terms they have been increased because they were not reduced in line with the RPI

The principal of taxing higher earners at higher rates is used worldwide, including that bastion of capitalism and personal freedom the USA.

Let's face it Taxation has to be raised and it is better to take it from those who can afford it best ie those on higher incomes rather than taxing
those on lower incomes at a marginal rate of 70%.