Increase in tax allowance

zygurat789

Debt_Free_Chick wrote: »

Yesterday's Coalition Programme here

Section 29 on page 30

"We will increase the personal allowance for income tax to help lower and middle income earners. We will announce in the first Budget a substantial increase in the personal allowance from April 2011, with the benefits focused on those with lower and middle incomes. This will be funded with the money that would have been used to pay for the increase in employee National Insurance thresholds proposed by the Conservative Party, as well as revenues from increases in Capital Gains Tax rates for non-business assets as described below."

This will not help the lower earners who do not pay tax or, to a lesser extent, those earning less than £10K. It will benefit most those paying 40% tax, with a taxable income of less than £100K

John_Pierpoint

dzug1 wrote: »

Even Fred the shred?

More seriously, I can't see the slightest logical reason for any special tax concessions for them on those grounds. No more or less than anyone else. Political reasons - yes - it looks good and if cleverly packaged needn't actually mean anything other than the feel good factor.

On other grounds - yes - higher cost of living and the like. If it's true.

Fred the shred does not get the pensioner's personal allowance.
As income rises there is a band of 30% income tax that claws back the relief given to people on very modest incomes.
Dear old Fred will be on 50%, probably on everything, I don't remember the exact details of his redundancy/retirement/compensation.
With Inheritance tax at 40%, perhaps he would be better off dead?
(Come to think of it - trusts pay 50% too).

Fellow money savers muddle through the rules here:
https://forums.moneysavingexpert.com/discussion/1635289

Taxman tries to sugar the pill here:
http://www.hmrc.gov.uk/incometax/personal-allow.htm

TM1976

zygurat789 wrote: »

This will not help the lower earners who do not pay tax or, to a lesser extent, those earning less than £10K. It will benefit most those paying 40% tax, with a taxable income of less than £100K

If you read this detail it's specifically for low and middle incomes, so I expect to see a claw back for higher rate payers, possibly for those earning below the 40% threshold too.

Also I expect this to be paid for a lot of people instead of tax credits not as well as tax credits. For that reason I agree with you that this probably isn't going to be as big a tax giveaway as people may think. I actually think it's a good move though because taking tax away from people then giving is back is benefits is a really inefficient way to go about things.