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understanding the cut of the 10p tax band.
Former Member
Posts: 1,876,323 The Mix Honorary Guru
i keep seeing on the tv about the scrapping of the 10p tax band and says it effects poorer people, mainly under 25s earning less than around £20k. how is this so? say you are earning £19k you should already be paying 22% tax anyway shouldnt you?
can anyone explain.
also, what are peoples thoughts on it?
thanks
can anyone explain.
also, what are peoples thoughts on it?
thanks
0
Comments
next 5k (ish) was taxed at 10p
rest of it at 22p
now its just
5k tax free
everything else at 20p
so say you earned 10k, 5k is tax free, the next 5k, instead of paying 10% on you are now paying 20% on
By the time you get over 18/19k or so, the 2p in every pound less lax you have paid on everything over the fiirst 10k, means you work out better
i can see why its upset so many people then.
Last year, presuming you were on a standard tax code of 522L, you could earn £5225 tax free, then were taxed 10% on the next £2230 you earnt and then taxed 22% on the next £34600.
This year, presuming your tax code has been uplifted to 543L, you can earn £5435 tax free, then will be taxed 20% on the next £36000 you earn.
It's the fact you are being taxed more on that first £2230 - 20% now instead of 10% last year - which is affecting people on lower incomes. Once you earn over £18k, the switch between 10%+22% to 20% balances itself out just about.
That's the way I understand it.. Please, Joolyknockers, come along and correct me or confirm it so that I know I'm doing my job properly! (I work in payroll).
Cos it will hurt the people who can afford it least.
read again what i put :P
i said i can see why it has upset so many people then.
i fully understand the implications for people on lower incomes. :thumb:
sorry
Thats pretty much it (ex-payroller), plus the lack of tax credits for lower paid young workers (people with childen wont be hit so badly if they claim tax credits) will mean they get hit the hardest.
I've been missing out for years and this year I finally get a good budget, and they want to reverse it.
piss off!
Surely a u-turn so close to a general election wouldn't do them any favours!! (would be suprised if they (could!) change it this tax year so any change would be from next April which is very close to the predicted May 2009 general election.. not exactly enough time for the nation to forgive and forget this f*ck-up!).
I have no idea how they can change it back and I can't see it happening quickly.... I think it will probably be next tax year too. I've been on maternity leave since August 07 so I was lucky enough to escape all the software and legislation updates at work, I'm dreading going back now LOL!!
Phew, thank you!
Someone asked me about it at work today but my boss waded in and confused the issue (otherwise known as baffled him with bullshit and still didn't give the right answer!) so now I can go back to him and give him this explanation
The people earning a lot wouldnt notice 1% but the people struggling at the bottom would notice more tax free.
just leave it as is, and alternate every couple of years.
screw both over, but on alternating years is my solution.
Too complicated.
So that extra 1% on earnings over £40k is really going to bring people down?
BBC
guarentee'd it'll only be of benefit to people on rediculously small wages like less than £10000 and i'll be caught in the middle with just less money.
stupid idea, stupid brown, no fucking chance are labour getting a vote from me this time, after 7 years of voting for them, thats it for me until they start doing something sensible.
Tony Blair was great, thought he was top, Gordon Brown might as well be Gordon the Gofer, altho he was more appealing.