MSE News: Budget 2012: Personal tax allowance to rise

thelawnet

SnowMan wrote: »

Yes I agree with you it would have been more accurate for me to say

So taking out the very top 10% of earners, the lower your earnings are, the harder you are hit by changes to 2013/2014 (which include changes already in place and changes in this budget combined)

Still shocking.

Not really.

The graph shows that the bottom 90% will all pay less income taxation, more indirect tax, and the cuts come from changes to tax credits and benefits.

Basically this is previously announced changes to tax credits from 2011-2011, and certainly not news.

EvieSaver

Also, am I calculating this right?

We pay 40% tax so is this the impact on us in 2013?

Tax free allowance increase of £1100 x 20% = £220 saving but
40% threshold increase of £2125 x 40% = £850 extra tax

So the net impact will be £850-220 = £630 extra tax per year or £52.50 extra tax per month.

carolineb23

EvieSaver wrote: »

Also, am I calculating this right?

We pay 40% tax so is this the impact on us in 2013?

Tax free allowance increase of £1100 x 20% = £220 saving but
40% threshold increase of £2125 x 40% = £850 extra tax

So the net impact will be £850-220 = £630 extra tax per year or £52.50 extra tax per month.

No I don't think that's correct as the 40% threshold is reduced like you say but you'd have paid 20% on that anyway so the extra is £425 not £850.

AirlieBird

EvieSaver wrote: »

"HMRC say that most basic rate taxpayers gain by £170 in real terms, higher rate taxpayers gain by £42.50 when a reduction in NICs is taking into account."

What reduction is this? Does anyone know?

The Upper Earnings Limit and Upper Profits Limit is being reduced to keep it aligned with the Higher Rate Threshold. This means that higher rate taxpayers will pay full 12% NICs for a smaller band of income than currently and will therefore recoup some of the losses from the extra income that will fall in the higher rate tax band.

EvieSaver

carolineb23 wrote: »

No I don't think that's correct as the 40% threshold is reduced like you say but you'd have paid 20% on that anyway so the extra is £425 not £850.

Oh yes I think you're right. So that means the impact on us will be £425-£220 = £205. Thanks ever so much for your help.

sidneysides

My current salary is £55,669, but not sure how this will affect me? I am a public sector worker and my pension contributions are going up anyway, but some are suggesting that due to NIC's I might be worse off with regards to tax too? My brain hurts, anyone help?!!

Windows

[FONT=&quot]"I am announcing the [FONT=&quot]largest ever [FONT=&quot]increase[/FONT] in the personal [FONT=&quot]allowance[/FONT][FONT=&quot]" so said [/FONT]George Osborne.[/FONT][/FONT]

[FONT=&quot][/FONT]
[FONT=&quot]Ok so the number of extra £££ this is right; but in percentage terms which I feel tells a better story this is not true...[/FONT]
[FONT=&quot]
[/FONT]


2011/12 2012/13 2013/14 Personal Allowance
£7,475 £8,105 £9,205 Year on Year %

8.43% 13.57% Over 2 years


23.14%
So overall 23.14% extra personal allowance over 2 years.

However back in the 1980's over the same amount of time is was 28.12%


1982/83 1983/84 1984/85 Personal Allowance
£1,565 £1,785 £2,005 Year on Year %

14.06% 12.32% Over 2 years


28.12%
My conclusion is it that is sounds good, but

1) Actually it is not true...

2) Having to now pay more towards a pension to ultimately get less out, the result is negative.

Rollinghome

So lucky old Bob Diamond. That extra quarter of a million he saves in income tax is bound to be put to good use.

I can see now all the plans being formulated to bring the price of a property below £2 million, like selling off the paddock and stable block separately.

Still, getting rid of the age allowance for pensioners will soon cover that.

Kenny43

These announcements today have confused the life out of me! I'm one of those lucky people who get to work inexcess of 70hrs a week which earns me 42075 annually. So will I now get clobbered for 40pc tax? And will that be on everything over the personal allowance or just on the amount over the limit?

AirlieBird

sidneysides wrote: »

My current salary is £55,669, but not sure how this will affect me? I am a public sector worker and my pension contributions are going up anyway, but some are suggesting that due to NIC's I might be worse off with regards to tax too? My brain hurts, anyone help?!!

You will pay more Income Tax and less National Insurance. Together you'll be £42.50 better off in real terms.

Kenny43 wrote: »

These announcements today have confused the life out of me! I'm one of those lucky people who get to work inexcess of 70hrs a week which earns me 42075 annually. So will I now get clobbered for 40pc tax? And will that be on everything over the personal allowance or just on the amount over the limit?

Just the amount over the higher rate threshold.