Budget 2007

In message , Andy Pandy writes

Again. I've been hit every year for the last few years as the NI upper threshold has increased, as I'm stuck in the band between the upper NI threshold and the higher rate tax threshold.

Scottish git at No.11.

Last few years it's just been inflation increases. Next year it's inflation

*plus* 3900 !!

My calculation suggests that anyone earning over about £19,000 will begin to gain, using this year's personal allowance.

igher rate band,

Thanks for that.

Not so much missed as "don't know where to find these numbers". Where's a good place to go to get these numbers or have you read through the about 2000 pages of documents linked from the bbc website?

Ah. I see. And was there any hint whether the UEL would continue to rise about the HRT threshold in the future?

I think increasing the UEL is less fair than increasing the 1% above the UEL because increasing the UEL means that everyone earning more than X pays Y more while increasing the 1% means that you pay an extra amount proportional to your total salary.

However, despite that I can see the sense in making the UEL the same as the HRT threshold purely to make things more transparent - and there was an anacronism where people earning the HRT threshold paid a smaller proportion of their salary as tax+NI than someone earning the UEL.

Tim.

If what you want to achieve is for NI contributions to be paid on all income taxed at the standard rate, but not at the higher rate, this still won't do it, will it?

AIUI, the HRT threshold applies to *taxable* income (after allowances) while the UEL applies to *total* income.

wrote

But why look at the *difference* between "then" and "now"?

If there were unsightly "bumps" in the scale before, and you add a "smooth" element, then you'll still end up with those pesky "bumps" afterwards as well. The only way to get rid of the "bumps" is to add an element that has "bumps" in the opposite direction... :-(

Bitstring , from the wonderful person Tim said

There are only two logically defensible positions on taxation ..

1) Everyone pays for what they get .. i.e. the government takes £5k off you, anything more that you earn, you keep. 2) Everyone pays according to what they can afford. I.e. you get to keep the first £12k you earn (plus £xk per dependent), anything over that the government gets.

Everything in between is a fudge.

AIUI the alignment will be between the UEL and the higher rate threshold plus the personal allowance.

Of course this still won't align it for everyone - since people with some unearned income or BIKs (eg company car) will get taxed on more income than they pay NI on, and people who make pension contributions/gift aid will pay NI on more income than is taxed.

When I wrote "people" I really meant journalists.

Best place to go is to the horse's mouth, the treasury web site:

The first press notice is where I read the info.

More detail here (together with reasoning for the changes and loads of spin about how everyone is much better off as a result of this wonderful government's actions):

Only a (seemingly) one off increase of 800 above inflation in 2009.

That is the way I thought they'd go, I expected them to keep increasing the "above UEL" rate until it eventually became the same as the main rate, while at the same time increasing the HRT threshold.

Yes - but when you take tax credits and benefits into account that's the norm - the lower your income the higher your marginal rate of tax.

Jemdam.com writes

And pensioners with modest Company pensions (like myself), who don't get tax credits will lose out most with the removal of the 10% band.

We will be told to shut up and use our free bus passes. ;-)

"David Horne, _the_ chancellor (*)" writes

Cos I'm a pensioner and we don't get tax credits. :-)

I wouldn't have believed it either, but is it really a Labour Government we have had for the last 9 years?

But you'll gain with the increase in age related allowances. Assuming your pension really is "modest" (ie under 20k).

Good point. I don't think so.

Andy Pandy writes

I do indeed. I only have the age-related figures for 2007/2008. The following one is of more interest because I will reach 75 during that year.

From:

"increasing the higher personal allowances for those aged 65 or over by 1,180 above indexation in April 2008, removing 580,000 pensioners from paying tax. By April

2011, no pensioner aged 75 or over will pay any tax until their income reaches 10,000"

Andy Pandy writes

Thanks. That extra 1180 above indexation will just cancel out the £114 extra tax I would have paid. :-)

I've yet to work out how this is anything other than shafting the lowest paid.

Or does *everyone* get tax credits these days..?

Nope. You either need to have kids, or be over 25 and work at least 30 hours a week, or be disabled and work 16 hours. And your income need to be low enough - the threshold varying from about 12k for a single person to well over 30k for a family with 3+ kids.

People in this range do quite well out of the budget - I calculate most will be

200 a year plus 150 per child better off (this accounts for the income tax changes as well).

But other low paid people, such as under 25's, second family incomes etc, are truly getting shafted by this budget.