Petition to have personal allowance re-instated for everyone

somethingcorporate

Sorry, you'll not find much support for tax cuts for the rich here I am afraid...which is what you are asking for.

gadgetmind

Spidernick wrote: »

Cyou would be a fool not to put money into a pension (assuming you are not already 'maxed out'

Well, there's the rub. Annual Allowance has come down to £40k, and as of next tax year is further reduced as pay increases.

Anyway, heading towards 1000 signatures now, so keep up the good work.

ASutton

Linton wrote: »

Yes lets get rid of these anomolies. Keep the tax allowance for everyone but remove the top limit for NI so that everyone pays 12% NI on their earnings. At present any income beyond £42K only has 2% NI deducted. Seems fair to me.

Why should people who earn more than 42k have to pay 12% NI when they already pay an additional 20% in tax?

I agree we should all pay the same, therefore we should all pay 20% tax 12% NI and all get the personal allowance. Why is it that in this country we always need to penalise the successful people who the country should be proud of? These people often have successful business who create jobs for the rest of us and I would rather see them get tax breaks than the lazy and stupid.


Instead we have to support unemployed and in most cases, the unemployable families who can't afford to support themselves let alone their own children.

Spidernick

One of the more idiotic plans by the Green Party was a desire to scrap the NI ceiling. This would have meant that someone earning about £45K a year (so hardly rich in any shape or form) would have had a 52% marginal rate on every additional pound they earned, being 40% tax and 12% NI - absolutely bonkers!

martinsurrey

I'm not bothered about paying more tax as I earn more,

What is crazy is the marginal tax rates going from 42%-62%-42%-47%

this results in unintended complexity in both the individual tax planning, and government tax takes (they think someone will pay more tax, but they end up paying less as they stick it in a pension).

I believe that the income tax marginal rates should be made incremental, while being tax take neutral so remove the personal allowance withdrawal and lower the start point of the additional rate (and or increase the additional rate by a few %).

Not about paying less tax.

gadgetmind

martinsurrey wrote: »

they think someone will pay more tax, but they end up paying less as they stick it in a pension

Well, quite. This and the forthcoming changes to Annual Allowance will more than likely be a net loss for HMRC even before we figure in those who'll simply up sticks.

martinsurrey

gadgetmind wrote: »

Well, quite. This and the forthcoming changes to Annual Allowance will more than likely be a net loss for HMRC even before we figure in those who'll simply up sticks.

Exactly, people in this bracket are financially aware of how perverse this band is, and have so many financial options in how/when to take income that its just a pain.

take this as an example.

someone earns £100k a year, they get an additional £15k of share options a year (with a simplified £10k personal allowance).

If they exercise their options as they get them they will pay £9,300 in IT and NI tax for a net £5,700 per year (£17,100 over 3 years)

If they defer these share options for 2 years and exercise them in 3 year batches (£45k) they will pay £22,900 IT and NI for a net £22,100, or £5,000 more, a net return of deferral of about 28% compounded, which is the best return you can get.

Net result for the treasury, no money on the shares for 2 years, and then less than expected in one lump sum, and someone on £100k can afford to defer for 2 years to get such a huge rate of return.

gadgetmind

martinsurrey wrote: »

If they exercise their options as they get them they will pay £9,300 in IT and NI tax for a net £5,700 per year (£17,100 over 3 years)

We have to pay the employer's NI (13.8%) on a lot of our awards, so if what's left gets hit by 60% tax and 2% NI, we might as well not bother.