this 10p tax issue.....

zzzLazyDaisy

But some people will lose out and they are the poorest people. I am on incapacity benefit, which is taxable and takes up most of my personal tax allowance. I also have some interest on compensation from a car accident which tops up my income. That interest all fell within the 10% tax band, so previously 20% tax was automatically deducted by the bank, but then I got half of that tax rebated as I was on the 10% tax bracket. From 6th April 2008 the 10% tax band has gone, and my income tax has gone up by 100% (from 10% to 20%). This is my only income. There will be a lot of people on low incomes in a similar position.

vix2000

Also factor in inflation, rocketing food costs, fuel bills, petrol price increases etc. and no pay increase and then do the sums.

tigtag02

zzzLazyDaisy wrote: »

But some people will lose out and they are the poorest people. I am on incapacity benefit, which is taxable and takes up most of my personal tax allowance. I also have some interest on compensation from a car accident which tops up my income. That interest all fell within the 10% tax band, so previously 20% tax was automatically deducted by the bank, but then I got half of that tax rebated as I was on the 10% tax bracket. From 6th April 2008 the 10% tax band has gone, and my income tax has gone up by 100% (from 10% to 20%). This is my only income. There will be a lot of people on low incomes in a similar position.

Im not saying that its right, its disgraceful and yes, your situation is a perfect example as to why.

I was just pointing out that the figures being quoted are a little squ-wiff.

Daz1

I read somewhere that there are 2 measures of inflation, RPI, or something like that and one other. 1 measure runs higher than the other so, depending on whatever the agenda is, you may hear either of the 2 being quoted. Eg. Energy companies, supermarkets etc need an excuse to put up their prices, they quote the higher rate of inflation to justify higher increases. Your employer negotiates your pay rise, they quote the lower rate so that they don't have to give you such a big raise.......that's my theory anyway

sdooley

zzzLazyDaisy wrote: »

But some people will lose out and they are the poorest people. I am on incapacity benefit, which is taxable and takes up most of my personal tax allowance. I also have some interest on compensation from a car accident which tops up my income. That interest all fell within the 10% tax band, so previously 20% tax was automatically deducted by the bank, but then I got half of that tax rebated as I was on the 10% tax bracket. From 6th April 2008 the 10% tax band has gone, and my income tax has gone up by 100% (from 10% to 20%). This is my only income. There will be a lot of people on low incomes in a similar position.

Actually LazyDaisy, there will still be a 10% tax rate on savings income, so this may help you. Also, do you put a chunk of your compensation into an ISA each year? Probably better interest rates and no tax, unlike the solicitor's client account if it is still there!

noh

zzzLazyDaisy wrote: »

But some people will lose out and they are the poorest people. I am on incapacity benefit, which is taxable and takes up most of my personal tax allowance. I also have some interest on compensation from a car accident which tops up my income. That interest all fell within the 10% tax band, so previously 20% tax was automatically deducted by the bank, but then I got half of that tax rebated as I was on the 10% tax bracket. From 6th April 2008 the 10% tax band has gone, and my income tax has gone up by 100% (from 10% to 20%). This is my only income. There will be a lot of people on low incomes in a similar position.

The 10% band still exists for the first £2230 of savings income so with your income mix you should be no worse off
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4015566

Nigel

Chuzzle

Hi

I don't understand this tax business at all so could someone let me know if I'm going to be any better off?

I am 35 full time employed £14k per year, husband full time employed £14500 per year, two kids (10 & 15) and entitled to around £16 per year tax credits! oh and a mortgage (90k)

Will I be any better off?

zzzLazyDaisy

sdooley wrote: »

Actually LazyDaisy, there will still be a 10% tax rate on savings income, so this may help you. Also, do you put a chunk of your compensation into an ISA each year? Probably better interest rates and no tax, unlike the solicitor's client account if it is still there!

Thanks to sdooley and noh for this information. I wasn't aware of this and it will really help. If you had not told me this, I would have stopped submitting my annual claim for tax rebate after this tax year.

Yes I do transfer money up to my cash isa limit at the start of each tax year. It actually has the effect of REDUCING my income on a month to month basis, lol, but only because I don't touch it and leave the interest to compound :rotfl:

Thanks again, this is a great site :beer:

taxation.guide

Hi,

I completely agree with sdooley, 10% tax rate is always presumed in this kind of situation, so first verify th solicitor's client account.:rolleyes:

Mikeyorks

zzzLazyDaisy wrote: »

That interest all fell within the 10% tax band, so previously 20% tax was automatically deducted by the bank, but then I got half of that tax rebated as I was on the 10% tax bracket. From 6th April 2008 the 10% tax band has gone, and my income tax has gone up by 100% (from 10% to 20%).

If your interest all fell within the 10% tax band ...... then it continues to do so. Whilst the 10% tax band has been abolished ..... a new 10% (to £2320) savings only band has been introduced (and referenced many times in these threads!). But you only get that if it is savings income which hits any part of the band formed by (£personal allowances + £2320)

Example in here :-
http://forums.moneysavingexpert.com/showthread.html?t=844615