Withdrawal of 10% tax band; some number-crunching please.

jem16

ManAtHome wrote: »

I suppose the real damage is £223 - extra 10% of the first £2230 above your allowance. Masked a bit by allowances going up, but they normally go up anyway.

Also reduced as the next band is 20% and not 22%.

Jem - is the £210 increase to the full allowance (so likely to be less for a lower tax code)?

As CIS says you will get the full £210 increase.

ManAtHome

Depends how you look at things SDW - in terms of how much extra tax you will pay, £125 (as in Jem's post). The increase in allowances and dropping the standard rate is giving you an extra £80, but removing the 10% band is grasping £220 odd off you to pay for this "extra" so you end up £125 down overall.

That's why the "i am dropping the standard rate from 22 to 20%" was in the budget speech and removal of the 10% band was on page 53 of the budget statement (that was a guess by the way...).

CIS/Jem - thought it was the IB payments dropping the tax code to 245 - if so, indexation will could chip a tenner off the £210 allowance increase (or am I barking [up the worng tree])?

jem16

ManAtHome wrote: »

CIS/Jem - thought it was the IB payments dropping the tax code to 245 - if so, indexation will could chip a tenner off the £210 allowance increase (or am I barking [up the worng tree])?

I should imagine it is that and yes it will make a difference overall. However the £210 increase in allowances still applies but the tax will alter as the overall income has increased.

As I said it's only an estimate based on this year's income ( as 7DW didn't know next year's) but taking into account next year's allowances.

ManAtHome

Thanks Jem - wasn't having a go at your numbers, just the way that the tw@ chancellor and his "hear hear" gang in the house of pr@s thought it was something to cheer at.

seven-day-weekend

Wow! So much discussion over my little query!

Dodn't understand most of it but did understand that it's about £125.

I rang up the Inland Revenue (or whatever they are called these days) and they explained to me how the IB took the tax code down, it seemed to me, looking at his notice of coding, that they were taking all his IB off him, but once they explained I understood how it worked. I've forgotten it now and don't understand again, but accept that his tax code is correct.

Now this new thing happens!

Thanks all of you for taking the time to answer.

jem16

Basically your husband's IB comes to him with no tax paid. What HMRC do is reduce his tax-free allowances by the amount of his IB which then means that amount is taxable via his teacher's pension.