Income tax avoidance

GunJack

But an extra 500 of allowance is only 100 less tax, hardly going to be significant to anyone really...

...and maybe this is part of the problem - cumulatively to the treasury it's a significant number, but to individuals it isn't, so maybe we should get used to the idea of paying a bit more tax and get the country back on a better economic standing...for example yes I benefitted from the 2x2% cuts in NI but was it really the right thing to do without raising income tax to compensate? I suggest not ..

Marcon

GunJack said:

But an extra 500 of allowance is only 100 less tax, hardly going to be significant to anyone really...

Maybe not to the posters on this website, but that somewhat glib remark ignores the fact that for at least 20% of the population, every penny counts:

More than 1 in 5 people in the UK (21%) were in poverty in 2022/23 – 14.3 million people. Of these, 8.1 million were working-age adults, 4.3 million were children and 1.9 million were pensioners. To put it another way, around 2 in every 10 adults are in poverty in the UK, with about 3 in every 10 children being in poverty. 

https://www.jrf.org.uk/uk-poverty-2025-the-essential-guide-to-understanding-poverty-in-the-uk

Moonwolf

GunJack said:

But an extra 500 of allowance is only 100 less tax, hardly going to be significant to anyone really...

...and maybe this is part of the problem - cumulatively to the treasury it's a significant number, but to individuals it isn't, so maybe we should get used to the idea of paying a bit more tax and get the country back on a better economic standing...for example yes I benefitted from the 2x2% cuts in NI but was it really the right thing to do without raising income tax to compensate? I suggest not ..

It is roughly the extra tax payable by a pensioner getting £35,000 a year if the basic rate went from 20p in the £ to 22p in the £.

i.e. It would make the change tax neutral or even beneficial for pensioners on £35k a year or less, the rest (including hopefully me when I get there) would pay more. It would basically stop people with very precise budgets having to make economies due to tax changes.

Those of us with more income or not yet pensioners would need a side hustle or spend a bit less on a holiday or not have Disney+ *and* Netflix at the same time.

The change would bring in more money from richer pensioners and more money from others with unearned income and be revenue neutral for most of the rest.

kinger101

GunJack said:

But an extra 500 of allowance is only 100 less tax, hardly going to be significant to anyone really...

...and maybe this is part of the problem - cumulatively to the treasury it's a significant number, but to individuals it isn't, so maybe we should get used to the idea of paying a bit more tax and get the country back on a better economic standing...for example yes I benefitted from the 2x2% cuts in NI but was it really the right thing to do without raising income tax to compensate? I suggest not ..

Income tax has been raised.  By freezing allowances. And increasing employer NI has likely had an impact on wage growth.

GunJack

@Macron - nothing glib at all, I did say significant difference. Are those poverty figures ONS? Genuinely interested, they look high..

@Moonwolf I make it £400 difference going from 20 to 22% on 35k, how do you get 100?

@kinger101 yes the overall tax take is up due to frozen allowances, but only because people's income has risen so they have a higher taxable income - nothing new there, and they're still paying 20%. No income rise, no extra tax even if allowances stayed stationary. £80 of £100 in hand if income is increased is better than £0 of £0 if it isn't.

kinger101

GunJack said:

@Macron - nothing glib at all, I did say significant difference. Are those poverty figures ONS? Genuinely interested, they look high..

@Moonwolf I make it £400 difference going from 20 to 22% on 35k, how do you get 100?

@kinger101 yes the overall tax take is up due to frozen allowances, but only because people's income has risen so they have a higher taxable income - nothing new there, and they're still paying 20%. No income rise, no extra tax even if allowances stayed stationary. £80 of £100 in hand if income is increased is better than £0 of £0 if it isn't.

I know how fiscal drag works and I know  I pay higher proportion of my income in tax each year.

Moonwolf

GunJack said:

@Macron - nothing glib at all, I did say significant difference. Are those poverty figures ONS? Genuinely interested, they look high..

@Moonwolf I make it £400 difference going from 20 to 22% on 35k, how do you get 100?

@kinger101 yes the overall tax take is up due to frozen allowances, but only because people's income has risen so they have a higher taxable income - nothing new there, and they're still paying 20%. No income rise, no extra tax even if allowances stayed stationary. £80 of £100 in hand if income is increased is better than £0 of £0 if it isn't.

I wasn’t being exact, didn’t even do the maths, just vibed the ball parks.

Marcon

GunJack said:

@Macron - nothing glib at all, I did say significant difference. Are those poverty figures ONS? Genuinely interested, they look high..

Actually you didn't say that:

GunJack said:

But an extra 500 of allowance is only 100 less tax, hardly going to be significant to anyone really...

If you read https://www.trussell.org.uk/news-and-research/publications/report/hunger-in-the-uk-2025 you'll realise that £2 a week is hugely significant to millions - possibly just not the sort of people who post here who scrabble to minimise their tax bills and save every penny they can...

DRS1

I seem to recall the Tory govt some years ago saying that because they were going to increase the rate of NICs and because dividends weren't subject to NICs they were increasing the rate of income tax on dividends.  In the event the rise in NICs fell by the wayside but dividend tax went up just the same.

If Labour could find a way to replicate that I am sure they would.