MSE News: Budget 2013: Personal tax allowance

Steve_xx

Did anyone else note the mention of a change to the 10% band/rate? Chancellor said it was going to be zero. But didn't say when that would take effect.

VT82

Anarchist wrote: »

Great.

Just when I thought there would be some chance that there would actually be a budget policy that benefits me, a regular, average, single, skilled worker, it turns out there isnt.

The reduction has pushed my earnings over the basic tax threshold. I'm now a higher rate tax payer, and have benefitted in no way whatsoever.

If you are only just into the higher rate tax bracket, the 40% tax will only apply to a tiny bit of your income, whereas the increase in the tax-free allowance will still be felt in full. You are also unlikely to have to fill in a self assessment. So you are still better off, and really should check the numbers before having a big old moan.

UsetheFORCE

Steve_xx wrote: »

Did anyone else note the mention of a change to the 10% band/rate? Chancellor said it was going to be zero. But didn't say when that would take effect.

The 10% rate went years ago. The Chancellor was actually making the point about the fiasco over it and how he has removed the problem now that the income bands that was covered by it have now been completely covered by the 10,000 personal tax allowance!

Points scoring over the mess Labour made of the situation! He was basically saying that the people who benefitted from the 10% now pay 0% on that income due to the Personal Allowance.

Careful_ly

Steve_xx wrote: »

Did anyone else note the mention of a change to the 10% band/rate? Chancellor said it was going to be zero. But didn't say when that would take effect.

I noticed this too (I'm elegible for the 10% band).

I found an online article on the Telegraph site late last night that suggested there was a 0% band, but I have looked today and cannot find it. I cannot find any mention of it in any follow up reports on the budget.

I would not be at all surprised if the 10% has been withdrawn altogether, and not replaced with a 0% band. If this is the case this tax change will reduce my income by £167 a year.

Careful_ly

I am sorry Usetheforce, but your statement that the 10% tax band went years ago is wrong. I will shortly have to complete a self assessment to claim mine, as I have done for the last few years.
You are not alone in thinking it doesn't exist I had to ring the tax office 3 times in the same afternoon, until I spoke to someone who actually knew about it.
If someone is getting more than £12230 from income it doesn't come into force, so you can see that it is the lowest income of the population that are affected. (Figure based on 2013/14)


example 2013/14

income from earnings, or pensions, plus bank and building society accounts
£12230 - allowances of £9440 = £2790 taxed at 10% band = £279, so nett amount is £11951

2014/15

£12230 - allowances of £10000 = £2230 taxed at 20% band = £446, so nett amount is £11784


So increasing the allowances and getting rid of the 10% is a reduced income of £167 a year

cotswoldaccountant

Careful_ly wrote: »

I am sorry Usetheforce, but your statement that the 10% tax band went years ago is wrong. I will shortly have to complete a self assessment to claim mine, as I have done for the last few years.
You are not alone in thinking it doesn't exist I had to ring the tax office 3 times in the same afternoon, until I spoke to someone who actually knew about it.
If someone is getting more than £12230 from income it doesn't come into force, so you can see that it is the lowest income of the population that are effected. (Figure based on 2013/14)

The 10% rate only applies to savings income, if your total income is less than £12,230. It applies to the first £2,790 of taxable savings income. So, if you earn £12,230 of savings income but have no other income, then the first £9,440 will be covered by the personal allowance and the next £2,790 will be taxed at 10%.

If your income is higher than £12,230 than the 10% rate will not apply.

http://www.hmrc.gov.uk/rates/it.htm has all the rates and thresholds for income tax, so if you speak to an HMRC adviser who doesn't know about it, then direct them to this webpage!

The 10% starting rate for income tax was removed in April 2008.

UsetheFORCE

cotswoldaccountant wrote: »

The 10% rate only applies to savings income, if your total income is less than £12,230. It applies to the first £2,790 of taxable savings income. So, if you earn £12,230 of savings income but have no other income, then the first £9,440 will be covered by the personal allowance and the next £2,790 will be taxed at 10%.

If your income is higher than £12,230 than the 10% rate will not apply.

http://www.hmrc.gov.uk/rates/it.htm has all the rates and thresholds for income tax, so if you speak to an HMRC adviser who doesn't know about it, then direct them to this webpage!

The 10% starting rate for income tax was removed in April 2008.

Thanks for clarifying that, I was aware it existed for savings but didn't mention it as most people are likely not to be affected and/or will be more concerned by tax paid on worked income.

Steve_xx

Thanks folks for your clarifications regarding the 10% rate. I don't claim it myself, but an elderly uncle of mine claims it after I received some advice from the good folk on here a few years back. He heard the mention in the budget speech yesterday and asked me if I would try and find out if it was possibly being abolished.

He'll be pleased that it's still there!

Careful_ly

The majority of people won't care it does't have any impact on them.
The government don't care, how can they have any understanding of a income so low.
The tax system in this country is too complicated, so when ringing to request my refund I was told I was wrong, I knew I was right so did not give up. How many others have been fobbed off with the wrong information.

Article in the Mail in January about this 525,000+ claim this 10% rate, many more don't.

http://www.thisismoney.co.uk/money/saving/article-2270234/The-battle-10p-savings-tax-pensioners.html

Careful_ly

Steve_xx wrote: »

Thanks folks for your clarifications regarding the 10% rate. I don't claim it myself, but an elderly uncle of mine claims it after I received some advice from the good folk on here a few years back. He heard the mention in the budget speech yesterday and asked me if I would try and find out if it was possibly being abolished.

He'll be pleased that it's still there!

Don't give him false hope, I actually don't think its still there from 2014.

I hope I'm wrong !!