Increase to tax free allowance

"Stickems." wrote

Presumably, it *would* have risen from 6475 to

6625, but it's actually rising from 6475 to 7475.

That means it'll be 850 higher than it would have been, so you're 170 better off **than you would have been**.

Thank you for your lucid explanation.

In message , Tim writes

Unless you are over 75, in which case you already have an allowance of £9640. Increasing that to 10,000 would only be worth 360x0.2, which is £72. (Ignoring any indexing next April).

Except that the Age Allowance isn't absolute. If you have income of more than a certain amount (about £20k?) you start to lose £1 of Age Allowance for every £2 of additional income until you're eventually back to the standard allowance.

Anyone know whether the extra £1000 (or £850 or whatever) applies to the Age Allowance? Or will there simply be a reduced differential for being old?

It specifically says that the raise is for "under 65s". There is not mention at all in the document for over 65s.

tim

Yes, that is the case. I'll face that problem if my income ever reaches that threshold. ;-)

I can't answer that, and in spite of the insults I have received about the subject of SERPS indexing, I don't trust Osbourne as far as I could throw him, and will wait to find out next April, or in the Autumn Budget.

This government are hitting out at everyone below a certain level at the moment, before this coalition collapses, and some people just don't get it. The Lib Dems will be destroyed by their betrayal of their electorate.

Aren't they planning to take most of it back via increased employee NI?

Depend how much you earn. Looks like they're sticking with the Labour plans for employee NI, which increases the primary threshold and ups the rate by 1%, with a break-even point at about 20k, so people earning less than 20k will pay less NI and people earning more will pay more.

So with the income tax threshold rise, the break-even point is about

37k. So most NI payers will see a cut in direct taxes (ie income tax and NI) overall.