Income tax

olddogbreath

I work as a bus driver and earn £15k pa. My wife earns about £17k and children grown up.
In the last budget we were told that the 10% band would be going and tax would drop from 20% to 22%. I think that, either this next tax year if I earn the same,that my income will reduce due to the loss of the 10% band. Is this correct? Does anyone know the income required at which a 'gain' is made? I reckon it is about £18k. Where can I get more information?
Thank you.

CLAPTON

we won't know the personal allowance for 2008/9 until the budget so .. your question can't be answered

Mikeyorks

It won't clarify until March. There have been some discussions on here - if you look back on the threads eg :-

http://forums.moneysavingexpert.com/showthread.html?t=654535&highlight=17k

olddogbreath

Thank you for that. Have looked on previous thread. Information confirms what a rip off tax system. News commentators suggest that this scheme of Uncle Gordon's means more tax revenue.
It also means that we will all have to contribute more into our pensions, ie 78% now, 80% in future, as Gordon only contributes 20% in future not 22%. Am I correct in this?

Mikeyorks

olddogbreath wrote: »

It also means that we will all have to contribute more into our pensions, ie 78% now, 80% in future, as Gordon only contributes 20% in future not 22%. Am I correct in this?

Don't recognise that. The 20% / 22% look too similar to the changes in the rates of Income Tax?

Most of the changes announced re taxation .. are listed in this Press notice created just after the pre-Budget speech back in Oct :-

http://www.hm-treasury.gov.uk./newsroom_and_speeches/press/2007/press_109_07.cfm

ManAtHome

Yes, to get the same "bang for your buck", you'll have to increase pension contributions - this year £1000 in the pot will cost you £780, next year will cost £800.

CLAPTON

olddogbreath wrote: »

Thank you for that. Have looked on previous thread. Information confirms what a rip off tax system. News commentators suggest that this scheme of Uncle Gordon's means more tax revenue.
It also means that we will all have to contribute more into our pensions, ie 78% now, 80% in future, as Gordon only contributes 20% in future not 22%. Am I correct in this?

Yes that's right ... from the point of view of paying for a pension the higher the tax rates the better.

System

This is the most up to date information as per the HMRC website regarding tax and NI contributions.

http://www.hmrc.gov.uk/rates/it.htm

http://www.hmrc.gov.uk/rates/nic.htm

Elaine_Wilson

olddogbreath wrote: »

It also means that we will all have to contribute more into our pensions, ie 78% now, 80% in future, as Gordon only contributes 20% in future not 22%. Am I correct in this?

It is true that you should increase your pension contribution to take into account this reduction but remember it won't affect your standard of living. Your net pay will be increased as the basic rate is dropped from 22% to 20%.

At least, this is true for the part of your income which is paid into a pension fund. The reduction on the rest of your income may not cover the tax increase due to the abolition of the 10% band but that is a different matter.

olddogbreath

Here is a useful site, about effects of new tax

http://www.binaryincome.com/ukbudget.php

Any Thoughts?

MickHG

Hi, this might be of some help:-
Income Tax Allowances table
Income tax allowances 2007-08 (£) 2008-09 (£)
Personal allowance 5,225 5,435
Personal allowance for people aged 65-74 7,550 9,030
Personal allowance for people aged 75 and over 7,690 9,180
Married couple's allowance (born before 6th April 1935 but aged under 75) 6,285 6,535
Married couple's allowance - aged 75 and over 6,365 6,625
Income limit for age-related allowances 20,900 21,800
Minimum amount of married couple's allowance 2,440 2,540
Blind person's allowance 1,730 1,800


Extra Tax to be Paid by Low Earners due to change in 2008 Tax Rate
from 22% to 20%
Earnings. Tax @ 20%. Tax @ 22%. Extra Tax to pay up to 18K Income
5K

---

£0

---

£0

---

£0
6K

---

£155

---

£78

---

£78
7K

---

£355

---

£178

---

£178
8K

---

£555

---

£343

---

£212
9K

---

£755

---

£563

---

£192
10K

---

£955

---

£783

---

£172
11K

---

£1,155

---

£1,003

---

£152
12K

---

£1,355

---

£1,223

---

£132
13K

---

£1,555

---

£1,443

---

£112
14K

---

£1,755

---

£1,663

---

£92
15K

---

£1,955

---

£1,883

---

£72
16K

---

£2,155

---

£2,103

---

£52
17K

---

£2,355

---

£2,323

---

£32
18K

---

£2,555

---

£2,543

---

£12
19K

---

£2,755

---

£2,763

---

£8
20K

---

£2,955

---

£2,982

---

£27
21K

---

£3,155

---

£3,203

---

£48
22K

---

£3,355

---

£3,423

---

£68
23K

---

£3,555

---

£3,643

---

-£88
24K

---

£3,755

---

£3,863

---

£108
25K

---

£3,955

---

£4,083

---

-£128

NB:- This chart is based on a single person’s Earnings @ Basic rate of Tax.
Good Old Gordon.

Regards Mick