Increase in personal tax allowances.

noh

zygurat789 wrote: »

Like I said they will tax the poorest to give to the richest weren't the tories always the same?

Can you explain how increasing the tax allowance for those under 65 is taxing the poorest to give to the richest?

zygurat789

noh wrote: »

Can you explain how increasing the tax allowance for those under 65 is taxing the poorest to give to the richest?

OK for you very slowly

Increasing your tax allowances means that you will pay less tax.
Because mine stay the same I pay the same tax.
You now have more than before and I have the same.
If you now have more money than me you are richer by definition

StevieJ

zygurat789 wrote: »

OK for you very slowly

Increasing your tax allowances means that you will pay less tax.
Because mine stay the same I pay the same tax.
You now have more than before and I have the same.
If you now have more money than me you are richer by definition

Twisted logic Big two letter word that IF.

StevieJ

wakeupalarm wrote: »

The over 65 allowances were increased substantially a few years back to compensate for the removal of the 10% tax band. The under 65's benefited at the time by about £120 IIRC. The failure to increase the over 65's allowance means that the compensation for the removal of the 10% tax band is itself being removed.

The under 65's will have benefited from the removal of the 10% tax band by £120 and now the increase in allowance by a further £200. Total up £320 per annum.

Over 65's will have lost from the removal of 10% tax band by £200 and gain nothing from the latest budget. Total down £200 per annum.

I thought the increased age allowance was planned well before the removal of the 10% tax band? Why do you think that it is only over 65's that have low income? One reason that the age allowance was not increased was the same reason that all allowances were not increased because it is based on RPI at Sept end which was -1.4%.
Was the 10% tax band only for over 65's, I didn't realise that.

hugheskevi

For anyone reading this thread who is unfamiliar with how the higher personal allowances work for those aged 65-74, here is a quick summary of what people pay now, and what they will pay in 2011/12:

Note - this assumes a frozen personal allowance for 65-74 year olds in 2011/12 which is only for illustrative purposes as nothing has been announced regarding the uprating of this threshold. It is probable this threshold will be uprated by CPI (forecast to be about 2.7%, so new allowance would be around £9,750).

2010/11
Pay no income tax on income up to £9,490
Pay 20% tax on income between £9,490 and £22,900
Pay 30% tax on income £22,900 and £28,930 (as higher personal allowance is withdrawn, resulting in marginal tax of 30%)
Pay 20% tax on income between £28,930 and £43,875
Pay 40%+ tax on income over £43,875

Assuming that the higher personal allowance is frozen at £9,490 in 2011/12 the position becomes

2011/12
Pay no tax on income up to £9,490
Pay 20% tax on income between £9,490 and £22,900
Pay 30% tax on income £22,900 and £26,930
Pay 20% tax on income between £26,930 and £42,375 (approx)
Pay 40%+ tax on income over £42,375 (approx)

As can be seen from comparing the two years, those with income between £26,930 and £42,375 per year gain from the higher Personal Allowance, those with income below £26,930 pay the same amount of income tax.

moonrakerz

zygurat789 wrote: »

OK for you very slowly

Increasing your tax allowances means that you will pay less tax.
Because mine stay the same I pay the same tax.
You now have more than before and I have the same.
If you now have more money than me you are richer by definition

Ah ! A true Socialist.............

"What's mine is mine and what's yours is ours"

If the Tories want to keep getting elected then surely it is in their interest for EVERYONE to become rich ?
If Labour want to keep getting elected then surely it is in their interest to keep EVERYONE poor ?

StevieJ

hugheskevi wrote: »

For anyone reading this thread who is unfamiliar with how the higher personal allowances work for those aged 65-74, here is a quick summary of what people pay now, and what they will pay in 2011/12:

2010/11
Pay no income tax on income up to £9,490
Pay 20% tax on income between £9,490 and £22,900
Pay 30% tax on income £22,900 and £28,930 (as higher personal allowance is withdrawn, resulting in marginal tax of 30%)
Pay 20% tax on income between £28,930 and £43,875
Pay 40%+ tax on income over £43,875

Assuming that the higher personal allowance is frozen at £9,490 in 2011/12 the position becomes

2011/12
Pay no tax on income up to £9,490
Pay 20% tax on income between £9,490 and £22,900
Pay 30% tax on income £22,900 and £26,930
Pay 20% tax on income between £26,930 and £42,375 (approx)
Pay 40%+ tax on income over £42,375 (approx)

As can be seen from comparing the two years, those with income between £26,930 and £42,375 per year gain from the higher Personal Allowance, those with income below £26,930 pay the same amount of income tax.

Mention must be made that tax free income is not included in the above so someone over 65 could earn over £22900 as long as the extra income comes from tax free sources e.g. sources like ISA's NS&I savings certificates or Investment trusts, this is why tax planning was important pre retirement. The question is if the Age Allowance and the personal allowance are to be equalised will it now matter? It is only fair for the govt to clarify this at the earliest to allow people to plan for retirement.

BTW the only reason that someone over 65 doesn't gain on income below £26,930 is because they were receiving
preferential allowances in the first place (and still will be) i.e. a pensioner earning below £26,930 will be paying less tax than someone in full time work on the an equivalent wage and thus will be receiving more net income.

novice-saver

zygurat789 wrote: »

I don't think we do have a 0% rate of tax, The lowest rate of (income) tax is 20%.

You are awkward.

If you get paid less than the personal allowance you pay no tax...

wakeupalarm

StevieJ wrote: »

I thought the increased age allowance was planned well before the removal of the 10% tax band? Why do you think that it is only over 65's that have low income? One reason that the age allowance was not increased was the same reason that all allowances were not increased because it is based on RPI at Sept end which was -1.4%.
Was the 10% tax band only for over 65's, I didn't realise that.

I don't think I said anywhere only the over 65's have low income nor have I said 10% tax band was for the over 65's only. As average earnings are around £27000 and average penioner income is around £14000 then it may well follow that the average over 65's do have a lower taxable income then the average under 65's.

StevieJ

wakeupalarm wrote: »

I don't think I said anywhere only the over 65's have low income nor have I said 10% tax band was for the over 65's only. As average earnings are around £27000 and average penioner income is around £14000 then it may well follow that the average over 65's do have a lower taxable income then the average under 65's.

True, but there are many pensioners who receive income well in excess of the under 65's especially the younger members of our society, in addition it looks like the average pay awards for workers will trail well below that of the pensioner community over the next few years.

http://www.telegraph.co.uk/finance/7888729/Millions-face-four-year-fall-in-standard-of-living.html

Millions of workers will suffer effective pay cuts and a fall in their standard of living for the next four years, an economist from the Treasury’s independent forecaster has warned