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

I-LOV-MONEY

Can anyone help?

I am on a company pension, which pays out each month. I also receive some investment income c.£160 pm. Sometimes I do some casual work. I don't know if I will be doing any in September (probably not!). Will I benefit in any way from the tax reduction - perhaps through the pension ?

noahveil

Stephenbw wrote: »

I can see what you are saying but I'm afraid I can't agree.
I am interested in the overall changes to my income tax as a result of the budget.

How can you be sure that the PA would have risen to £5435?

The increase in the PA is just the usual annual inflationary rise and, as far as anyone knows, would have been exactly the same regardless of the 10% tax band abolition.

No, in order to provide a true comparison, its necessary to compare what someone would have been getting now WITH the abolition and WITHOUT the abolition.

What would be the point of comparing it with the situation last year - the person's income is likely to be different for a start.

Stephenbw

noahveil wrote: »

The increase in the PA is just the usual annual inflationary rise and, as far as anyone knows, would have been exactly the same regardless of the 10% tax band abolition.

"As far as anyone knows"...but that's just it nobody does know.

In the 2003-4 budget PAs were frozen; this year the chancellor raised the PA for the over 65s by more than 20%.
To offset (most) of the losses caused by the 10p abolition he has now raised the PA for under 65s by £600. Had he done this as part of the Budget package back in March we would not now be having this discussion.

noahveil wrote: »

No, in order to provide a true comparison, its necessary to compare what someone would have been getting now WITH the abolition and WITHOUT the abolition.

No, because this comparison is predicated on 'if's and but's'.
Comparisons of gains and losses pre and post budgets are always based on how the total budget package affects an individual or family, according to their personal circumstances.

noahveil wrote: »

What would be the point of comparing it with the situation last year - the person's income is likely to be different for a start.

This is precisely what all the tax calculators and all the budget analyses do

As I am on a fixed income, comparing the amount of income tax I paid last year with what I will pay this year, is particularly appropriate, and the bottom line shows that I will pay £40.10 more this year.

Fastflys

Personal allowance raised £600 to £6,035.

What is happening to the 10% tax rate for savings up to £2,320? Has that now been scrapped?

Scottish_Saver_2

Fastflys wrote: »

Personal allowance raised £600 to £6,035.

What is happening to the 10% tax rate for savings up to £2,320? Has that now been scrapped?

Where did this info come from? The HMRC site http://www.hmrc.gov.uk/rates/it.htm
says:

Income tax allowances

Personal allowance

2007-08 (£) 5,225

2008-09 (£) 5,435

Paul_Herring

Fastflys wrote: »

Personal allowance raised £600 to £6,035.

What is happening to the 10% tax rate for savings up to £2,320? Has that now been scrapped?

I've seen no mention of it being scrapped. Then again, the 10% band applies to so few people I guess the general media won't have picked up on whatever has(n't) happened to it.

Paul_Herring

Scottish_Saver wrote: »

Where did this info come from? The HMRC site http://www.hmrc.gov.uk/rates/it.htm
says:

Those are (as I write) out of date numbers.

Scottish_Saver_2

Paul_Herring wrote: »

Those are (as I write) out of date numbers.

Sorry but you haven't answered the query.

I cannot find any reference to a tax threshold increase anywhere, guess you must work for the HMRC!

jem16

Scottish_Saver wrote: »

Sorry but you haven't answered the query.

I cannot find any reference to a tax threshold increase anywhere, guess you must work for the HMRC!

He doesn't need to work for HMRC - it's been all over the news and on this forum since it was announced on Tuesday.

http://forums.moneysavingexpert.com/showthread.html?t=912871

http://news.bbc.co.uk/1/hi/business/7400115.stm

yabbadoo

MSE_Wendy 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.
UNQUOTE

WENDY - This is NOT what the Chancellor said. He actually said, everyone under 65 (read his speech to which you kindly provided the link).

For over 65's, the personal allowance was originally raised significantly - BUT this new mini-budget Personal Allowance increase specifically EXCLUDES over 65's.

Some of the £2.7 billion cost is being clawed back from "middle-high earners" by reduction of th 20% ceiling. What was originally given to low-income pensioners has been effectively reduced by £120 per tax-paying pensioner.

New Chancellor - old (Brown) tricks - give with one hand, take away with the other.