New 20% benefits stealth tax

kaya

Your elected governbent know that they will never get to reduce benefit payments so they are taxing the money that is already tax , a friend of mine recieved a letter today from HMRC stating that as of April next year any benefits payments over £143 will attract a 20% taxation, so in effect they are taxing money that is taken as tax already to line their own pockets rather than trying to reduce benefits payments and all the hassle that would cause them, i dont have a link or any more info about this other than the contents of the letter, i guess this will cover housing benefit etc., why not wait until the poor people are suffering then kick them in the stomach mr cameron? whats that-you already have...........................

ThumbRemote

kaya wrote: »

so in effect they are taxing money that is taken as tax already to line their own pockets

Yes, David Cameron will be keeping the money himself :rotfl:

SailorSam

It's hard to comment without knowing a few more details.

BigAunty

Sorry but it would be better if you could quote directly the specific clause in that letter or provide a link to this change in policy.

Otherwise, your post is just partial chinese whispers and full of mince, so the responses may be just be as vague and scattergun. I really don't mean to come across as harsh but unless the query and info is specific, this thread is just going to bounce around.

BigAunty

I've just had a quick google based on the slender info you provided.

Personally, I wonder whether your friends don't understand about general taxation and have conflated income from pensions and employment with income from benefits.

http://www.hmrc.gov.uk/rates/it.htm

The sum you describe is the current personal allowance -
Tax-free Personal Allowance

Nearly everyone who lives in the UK is entitled to an Income Tax Personal Allowance. This is the amount of income you can receive each year without having to pay tax on it.
The amount of your Personal Allowance depends on:

• your age on 5 April
• your total income

Total income means everything you receive from all taxable sources. That means you need to include things like pensions and interest on your savings in a building society before the tax has been taken off.

How do you get the Personal Allowance?

If you already pay tax through your job or pension, or if you complete a Self Assessment tax return, you should receive a Personal Allowance automatically

http://www.hmrc.gov.uk/incometax/personal-allow.htm

Lovelyjoolz

Precisely BigAunty. Thanks for posting that.

Essentially it means that anyone who receives benefits in excess of the personal tax allowance is liable to be taxed on that excess.

What are you getting worked up about OP? Do you think it is fair that, say, someone who works and gets £8,000 a year has to pay tax and yet someone receiving benefits of the same amount does not?

It's not about stealth tax, its about making things fair. At the end of the day, it should never be the case that those who work are worse off than those who don't.

WPN

kaya wrote: »

Your elected governbent know that they will never get to reduce benefit payments so they are taxing the money that is already tax , a friend of mine recieved a letter today from HMRC stating that as of April next year any benefits payments over £143 will attract a 20% taxation, so in effect they are taxing money that is taken as tax already to line their own pockets rather than trying to reduce benefits payments and all the hassle that would cause them, i dont have a link or any more info about this other than the contents of the letter, i guess this will cover housing benefit etc., why not wait until the poor people are suffering then kick them in the stomach mr cameron? whats that-you already have...........................

You also not mentioned what benefits this includes as not all are taxable.

krisskross

Just be glad that only cash benefits will be affected. After all most of us pay rent, council tax etc out of taxed income so perhaps the value of these should also enter into the equation.

brightonman123

is that AL benefits, gettting taxed together?

-rent/council tax, and JSA for example?

BigAunty

brightonman123 wrote: »

is that AL benefits, gettting taxed together?

-rent/council tax, and JSA for example?

I haven't come across a single article which has said there is a policy about to be implemented which will tax all benefits at 20%.

The whole focus on benefit changes that I notice are to do with the proposed move to Universal Credit from 2013.

While there are significant changes with that particular overhaul, I can't remember seeing anything in the policy paper for UC about taxing benefits either.

Until I am presented with different evidence, I really think this is a fuss over nothing caused by the OPs friends not understanding the difference between the tax and benefit system, confusing the tax free personal allowance and assuming that all benefit related income above it will result in a 20% taxable charge.

Their worries, I think, is total mince and does not apply to means tested benefits.

zagfles

Yawn, not another scare story swallowed by gullible Mirror reader types who believe all the "tories pitchforking babies" type stories.... It's not happening. Some benefits like JSA, ESA, state pension etc are taxable as they've always been. Housing benefit, council tax benefit, tax credits aren't and won't be. If you live off benefits alone, any taxable benefits will almost always come within the personal allowance anyway and so won't be taxed.