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  • FIRST POST
    • MSE Guy
    • By MSE Guy 31st Jan 11, 9:58 AM
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    MSE Guy
    MSE News: 750,000 more to become higher rate taxpayers
    • #1
    • 31st Jan 11, 9:58 AM
    MSE News: 750,000 more to become higher rate taxpayers 31st Jan 11 at 9:58 AM
    This is the discussion thread for the following MSE News Story:

    "Many more will start paying income tax of 40% on earnings from 5 April as the threshold drops from 43,875 to 42,475 ..."

Page 1
    • Niksan
    • By Niksan 31st Jan 11, 10:19 AM
    • 301 Posts
    • 172 Thanks
    Niksan
    • #2
    • 31st Jan 11, 10:19 AM
    • #2
    • 31st Jan 11, 10:19 AM
    I saw this mentioned on sky news website this morning but they said the figures were 35,001, from 37,400, so which is correct?

    EDIT: Ah nevermind, I just saw the other thread, and it's the tax free allowance, doh!
    Last edited by Niksan; 31-01-2011 at 10:26 AM. Reason: facepalm moment
    • Paul_Herring
    • By Paul_Herring 31st Jan 11, 10:27 AM
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    Paul_Herring
    • #3
    • 31st Jan 11, 10:27 AM
    • #3
    • 31st Jan 11, 10:27 AM
    Both are 'correct.' It's just that Sky don't bother adding in the tax free allowance of 7,475.

    7,475 + 35,000 = 42,475.

    So, it's 35,000 after your tax free allowance, or 42,475 if your tax allowance is 7,475 (not everyone's tax allowance need necessarily be 7,475.)
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • MSE Guy
    • By MSE Guy 31st Jan 11, 11:19 AM
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    MSE Guy
    • #4
    • 31st Jan 11, 11:19 AM
    • #4
    • 31st Jan 11, 11:19 AM
    To both the posters above: classic case of the poor way HMRC communicates tax allowances as the 35,000 figure is meaningless to most.
    • dori2o
    • By dori2o 31st Jan 11, 11:26 AM
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    dori2o
    • #5
    • 31st Jan 11, 11:26 AM
    • #5
    • 31st Jan 11, 11:26 AM
    To both the posters above: classic case of the poor way HMRC communicates tax allowances as the 35,000 figure is meaningless to most.
    Originally posted by MSE Guy
    Maybe people should actually read properly
    • Mikeyorks
    • By Mikeyorks 31st Jan 11, 11:53 AM
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    Mikeyorks
    • #6
    • 31st Jan 11, 11:53 AM
    • #6
    • 31st Jan 11, 11:53 AM
    To both the posters above: classic case of the poor way HMRC communicates tax allowances as the 35,000 figure is meaningless to most.
    Originally posted by MSE Guy
    It's more the increasingly classic way the media reports everything negatively.

    When the 1000 increase in the personal allowance to 7475 was reported in June it was made crystal clear that 40% taxpayers would not benefit. Accordingly the 20% rate band was reduced by 2000 to claw back the (2000 @ 20% =) 400. Which had been given in the 1000 extra PA (1000 @ 40% = 400).

    In other words the neutral effect that was intended! Fairer way of putting it across?
    If you want to test the depth of the water .........don't use both feet !
    • Paul_Herring
    • By Paul_Herring 31st Jan 11, 11:57 AM
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    Paul_Herring
    • #7
    • 31st Jan 11, 11:57 AM
    • #7
    • 31st Jan 11, 11:57 AM
    To both the posters above: classic case of the poor way HMRC communicates tax allowances as the 35,000 figure is meaningless to most.
    Originally posted by MSE Guy
    And the 42,475 figure quoted in 'your' article is likewise meaningless if your tax code isn't 747L.

    It's not just HMRC who are poor at communicating it would seem.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • haras_nosirrah
    • By haras_nosirrah 31st Jan 11, 11:57 AM
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    haras_nosirrah
    • #8
    • 31st Jan 11, 11:57 AM
    • #8
    • 31st Jan 11, 11:57 AM
    Will this affect child benefit too? More people will be 40% tax payers so I guess the new 40% tax payers will also lose their child benefit too.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Paul_Herring
    • By Paul_Herring 31st Jan 11, 12:00 PM
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    Paul_Herring
    • #9
    • 31st Jan 11, 12:00 PM
    • #9
    • 31st Jan 11, 12:00 PM
    In other words the neutral effect that was intended! Fairer way of putting it across?
    Originally posted by Mikeyorks
    But it's not 'neutral' though, is it? It ignores fiscal drag.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
    • Mikeyorks
    • By Mikeyorks 31st Jan 11, 12:07 PM
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    Mikeyorks
    But it's not 'neutral' though, is it? It ignores fiscal drag.
    Originally posted by Paul_Herring
    No. Because the PA increase for 11-12 is well above the rate (approx 400) at which normal indexation would have placed it.
    If you want to test the depth of the water .........don't use both feet !
    • Paul_Herring
    • By Paul_Herring 31st Jan 11, 12:30 PM
    • 6,769 Posts
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    Paul_Herring
    No. Because the PA increase for 11-12 is well above the rate (approx 400) at which normal indexation would have placed it.
    Originally posted by Mikeyorks
    Would you care to show how, for example, someone earning 43,875 in 10/11 will be paying less tax (on a par with inflation or whatever your preferred method of indexation is) than in 11/12, assuming they don't get a pay rise, due to the lack of fiscal drag you allude do?

    By my calculations:
    10/11 - 647L: (43875-6475)*20% = 7,480 income tax.
    11/12 - 747L: (43875-42475)*40% + (42875-7475)*20% = 7480 income tax

    That looks like fiscal drag to me.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
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