April 2008 Income Tax and NI Changes: How will they affect you?

linzi_pinzi

i am so angry i have just had my first wage slip this month with my new tax code and i was shocked in how much money i have lost,I am worse off than last year even with the company pay rise:mad:....So dont think i will be voting labour this year..

dannynixon

linzi_pinzi wrote: »

i am so angry i have just had my first wage slip this month with my new tax code and i was shocked in how much money i have lost,I am worse off than last year even with the company pay rise:mad:....So dont think i will be voting labour this year..

How much worse off are you? I get my payslip on monday. I shall wait and see...

pfantasmes

nogdude wrote: »

I don't think some people understand the way tax is calculated

If your tax code is 543L, it means you can earn £5435 before you pay tax. Say you earn £15000:

Take £5435 from £15000, leaves you £9565, this taxed at 20% means you pay £1913 in tax a year.

The 40% bracket is similar, but if you go over the limit say its £36000 you pay 40% on any money earnt over that amount.

ie paid £36100... take the £5435 from the £36000 leaves you £30565 taxed at 20% = £6113 tax

You then pay 40% on any £ above the limit, in this case £100 therefore another £40 in tax.

Total tax paid in the year... £6153

I hope that helps )

This is not quite right

If you earn £36100.00 and have a standard tax code of 543L the first £5435.00 is not taxed.

This leaves a taxable income of £30665.00 and will all be charged at 20 %

So the tax bill will be £6133.00 for the year

Using post 18th may bandings the threshold for 40% for a person on 543L will be
5435 + 36000 = £41453.00.

The system will get even more complicated. starting this year to iron out the discrepencies between the 40% tax threshold and the threshold at which you stop paying 11% NI, the Chancellor will increase the NIC l(currently 34840.00) limit by £3,900 in 2008/2009, after indexation. this would equate to the new NIC UEL of £40,040. (costing an extra £572.00)

In the following tax year (2009/2010) the income tax and NIC limits will then be matched. The exact details of how this will occur are not yet known.

It is very complicated but the final result is that more of your income will be subject to standard rate NI @11%.

I wonder how many of the 17% that voted to say if was fair will think so now.

Paul_Herring

pfantasmes wrote: »

standard tax code of 453l the first £5435.00 is not taxed.

Stick a 5 on the end, and that's your tax free income.

What you don't do is stick a 5 on the front.

453L means £4535 doesn't get taxed, not £5435.

TLDR means I couldn't be bothered reading the rest of post since it appeared to be based on a seriously flawed premise.

Mikeyorks

Paul_Herring wrote: »

seriously flawed premise.

No ..... just a mis-key? The 543L was correctly quoted in the post ..... and correctly stated further down.

dmbaxt

have just worked mine out with the listen to taxman site - I'm £4.16 a month worse off - even though I've just had a pay rise . my oh will be about the same as we both earn about the £14880 mark.
I know it's not a lot but it's nearly £10 per month we're losing and when you're in on DMP it doesn't sound good when you have to say well we're actually worse off now than when we made the original agreement

Noah'strolly

Really upset. got payslip today and it's £21 less than last month. With everything else going up and no pay rise, things have been a bit tight lately. This is the last thing I need!

Mikeyorks

Noah'strolly wrote: »

got payslip today and it's £21 less than last month.

Not from the tax and NI changes. The maximum monthly loss is around £12 ..... at around the £8k pa mark?

MSE_Martin

STOP PRESS! 13 May 2008. Personal allowances to rise!

The Chancellor has announced that everyone's tax-free Personal Allowance for 2008/09 (i.e. this tax year) will rise £600 to £6,035. This will fully or partly reimburse those who lost out when the 10p tax-rate was scrapped; and give a tax cut to many others.

For all those who earn above £6,035 the impact is a £120 gain and it will be backdated from the 6 April start of the tax year. This money will go straight into peoples pay... with £60 extra coming in September, and an increase of £10 per month for the rest of the financial year until next April.

Will this make up for the end of the 10% band

If you are a basic-rate taxpayer earning £6,035 or more, you'll pocket £120 more over the year than you would have done before this announcement.

This will make up what you lost when the 10% band disappeared, unless you earn between £7,130 and £9,075, when you could still be up to £30 out of pocket compared to last year (though the Govt says many will have had tax credit rises too).

Higher Rate Taxpayers won't gain (or lose)

For higher-rate taxpayers, the 40% threshold will shift down by £600 to £40,835, meaning most will earn exactly the same as they would have done (if you earn between £40,835 and £42,035, you make a small profit).

Milarky

MSE_Martin wrote: »

STOP PRESS! 13 May 2008. Personal allowances to rise!

The Chancellor has announced that everyone's tax-free Personal Allowance for 2008/09 (i.e. this tax year) will rise £600 to £6,035. This will fully or partly reimburse those who lost out when the 10p tax-rate was scrapped; and give a tax cut to many others.

For all those who earn above £6,035 the impact is a £120 gain and it will be backdated from the 6 April start of the tax year. This money will go straight into peoples pay... with £60 extra coming in September, and an increase of £10 per month for the rest of the financial year until next April.

Will this make up for the end of the 10% band

If you are a basic-rate taxpayer earning £6,035 or more, you'll pocket £120 more over the year than you would have done before this announcement.

This will make up what you lost when the 10% band disappeared, unless you earn between £7,130 and £9,075, when you could still be up to £30 out of pocket compared to last year (though the Govt says many will have had tax credit rises too).

Higher Rate Taxpayers won't gain (or lose)

For higher-rate taxpayers, the 40% threshold will shift down by £600 to £40,835, meaning most will earn exactly the same as they would have done (if you earn between £40,835 and £42,035, you make a small profit).

All correct. But that's '£120' off the '£223' that was removed in the last operation. Frank Field is happy, apparently but they are still taxing BR taxpayers by £100 more than if they hadn't stripped out the 10% rate. Let's not forget that was the starting point of this discussion. So the extra £100 has to come back to (some of the people) through a multitude of personal circumstances - eg some will be 18-21 and get the adult rate of minimum wage [maybeee???] if the LP commission jumps through that hoop... 60-64 year olds are getting winter fuelll payments topped up... Tax credits recipients already had a higher threshold for that benefit - so should acutally be 'better off'. But everything the Chancellor does from now on simply complicates the picture still further - increasing entropy and leading to the inevitable heat death of the universe