Abolition of the 10% Tax Band and reduction of Standard rate to 20% [Merged]

Crabman

I'll move this over to the Cutting Tax Board then, if it's more relevant there

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

Keith1946

Mikeyorks wrote: »

If you'd looked / posted in the 'Cutting Tax' forum you would have found several previous threads. Several of which reference media cover from Oct 2007 .... when it was announced.

I only found one reference in the "Cutting Tax Board" and that was dated around mid-2007. I did post a comment on it. Bearing in mind there does not seem much comment from the Financial Press we ,the Taxpayer, seem to be apathetic about the situation. apologies for putting the comment in the incorrect board.

jem16

How about;

http://forums.moneysavingexpert.com/showthread.html?t=654535&highlight=10%25+tax+band

http://forums.moneysavingexpert.com/showthread.html?t=603056&highlight=10%25+tax+band

http://forums.moneysavingexpert.com/showthread.html?t=580920&highlight=10%25+tax+band

http://forums.moneysavingexpert.com/showthread.html?t=651277&highlight=10%25+tax+band

Keith1946

EDINVESTOR has not been keeping up. On this, and about four other threads people have been discussing the Tax implications for the lower paid caused by:
The abolition of the 10% Tax Band and the reduction in the Basic Rate from 22% to 20%.
This affects the lower paid (those paid more than the Free allowance) up to approximately £18800-£19250 depending who does the calculations. The lower the income the greater the affect. This excludes people in receipt of Tax or Pension Credits, as adjustments are likely to be made.
My Gross Income from Pensions (I retired early due to ill health) is £9,141 and I estimate I will have to pay an extra £193 Tax. My Local Tax Office confirms my calculations.

Keith1946

Many people like myself, who have taken early retirement due to ill health, who have savings as well as a small Pension will be hit.
I am in receipt of two (non-state) Pensions amounting to £9141 per. year, and will see my my Tax rise by £193 per. year. Because of my age and Savings I am not entitled to Tax or Pension Credits.
There must be many people like myself, and many of them are probably not aware of the changes.
I wrote to my M.P. but just received a bland reply, I also sent an e-mail to The Treasury with a copy to Jeff Prestridge of The Mail on Sunday, neither have replied to date. The two petitions on The Downing Street web site do not have many signatories, which may indicate that these changes do not affect a large number of people. I hope it is not just apathy.

Mikeyorks

Keith1946 wrote: »

seem to be apathetic about the situation.

I do suspect there will be more comment after 6th April .. than there has been to date! There's a bemusing amount of data, from the Oct announcement, on the Treasury site (do realise that's not exactly the 'interest' you had in mind) .. but it doesn't mention they haven't replied to you.;)

Keith1946

The abolition of the 10% Tax Band and the reduction in the Basic Rate of Tax from 22% to 20% will affect many people adversely. Unfortunately a large proportion of them are not aware of it, otherwise The Downing Street Petitions (x2) would have more signatories and the National Press would have more to say about it.I retired early because of poor health, and do not receive any Benefits, Tax or Pension Credits. My earned Income from my Company and Private Pension amounts to £9,141 and in Tax Year 2008/09 my Tax will increase by £193. Our Tax system is meant to be equitable, this change is not. Anyone earning over the "Free Allowance" up to circa £19,000 will pay more Tax, after that figure the Tax paid is less. This cannot be right. The lower paid who receive Tax or Pension Credits are protected from this change. There are many of us who are not. I wrote to my M.P. and received a bland reply. I then wrote to the Treasury with a copy to Jeff Prestridge of The Mail on Sunday, to date I have not received a reply.

Murdina

Equally I wonder if people have appreciated that the fall in basic rate means if you pay for a personal pension, you will now have to pay slightly more (because only 20% now paid by government, not 22%) - OK it's not a lot but if you add it to all the other stuff going up at present, it's just another unwelcome move in the wrong direction.

Elaine_Wilson

I ddon't quite get these comments about the lower amount of tax relief on pension contributions.

OK, assuming your salary doesn't change what happens after 5th April?

The tax relief on any pension contributions goes down. Let's say you pay a gross premium of £1,000. In practical terms this means you actually pay £780 now because of the 22% tax relief. After April the tax relief will drop to 20% so you will have to pay an extra £20.

But your net pay will have increased by £20 because the rate of tax has fallen so how are you worse off?

Pdman

The tax rate on savings remains at 10% I think, is this for all savings?
How will it work in reality?