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

Former_MSE_Guy
Former_MSE_Guy Posts: 1,650 Forumite
I've been Money Tipped! Newshound! Chutzpah Haggler
edited 22 June 2010 at 6:58PM in Cutting tax
This is the discussion thread for the following MSE News Story:

Read the full story:

Comments

  • 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
    liz545 Posts: 1,726 Forumite
    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?
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  • Mikeyorks
    Mikeyorks Posts: 10,369 Forumite
    First Anniversary Combo Breaker
    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 :-

    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
    If you want to test the depth of the water .........don't use both feet !
  • 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
    John_Pierpoint Posts: 8,391 Forumite
    First Post First Anniversary
    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)
  • 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
    Premier_2 Posts: 15,141 Forumite
    Combo Breaker First Post
    edited 25 June 2010 at 8:24AM
    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?
    "Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 2010
  • Mikeyorks
    Mikeyorks Posts: 10,369 Forumite
    First Anniversary Combo Breaker
    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.
    If you want to test the depth of the water .........don't use both feet !
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