Quick budget question

The bbc has this on their website

Am I missing something here or is that statement totally false? Surely if 10p is being scrapped and everybody who paid that is now paying 20p then your tax is being doubled and your take home pay will be 10p lower for every pound you earn.
Have I got that right?

 

No, because it used to be 22% not 20%. So you will be

paying 20% tax on the money used to pay 22% on as well.

 

In theory, by cutting 2p off the 22p rate of tax and by scrapping the 10p band, it works out in a nett effect of nowt. You only pay 10p on first £1000 or so above personal limit

 

I thought that income tax wasn't what you pay on things that you buy

just tax on your income.

See this is why they should teach politics in schools.

 

Not much fun for the low-paid though is it? nt

 

RE: I thought that income tax wasn't what you pay on things that you buy

Agreed. Along with social responsibility and parenting. And financial management

 

So those that would have been in 10% band will be worse off but pretty much everyone else is better off?

Any idea what the bands actually are?

 

No not at all.

Can't agree with it from that point of view. I'd have to see a calculation to see how it affects people

 

It is, I've edited my reply above.

You will still be worse off if you are lower paid mind and better off if you earn over &pound;20K or summat like that.Gordon is a Tory, la, la la!</p>

 

The crossover is around 18.5K ,

anyone earning over that will be better off, anyone under will not.</p>

</p>

 

<table class="table-border" width="98%" border="0"><tbody><tr><th scope="col">

Income tax band </p></th><th scope="col">

Income tax rate on earned income (see note) </p></th><th scope="col">

Income tax rate on savings</p></th><th scope="col">

Income tax rate on dividends</p></th></tr><tr><th scope="row">

Starting rate:
&pound;1 to &pound;2,150 </p></th><td>

10%</p></td><td>

10%</p></td><td>

10%</p></td></tr><tr><th scope="row">

Basic rate:
&pound;2,151 to &pound;33,300</p></th><td>

22%</p></td><td>

20%</p></td><td>

10%</p></td></tr><tr><th scope="row">

Higher rate:
&pound;33,301 and above </p></th><td>

40%</p></td><td>

40% </p></td><td>

32.5%</p></td></tr></tbody></table>

</p>

</p><table class="table-border" cellpadding="1" width="98%" border="0"><tbody><tr><th scope="col"><div align="left">

Income tax allowances</p></div></th><th scope="col"><div align="left">

2006-07 (&pound</p></div></th><th scope="col"><div align="left">

2007-08 (&pound</p></div></th></tr><tr><th valign="top" scope="row"><div align="left">

Personal allowance</p></div></th><td valign="top"><div align="left">

5,035</p></div></td><td valign="top"><div align="left">

5,225</p></div></td></tr><tr><th valign="top" scope="row"><div align="left">

Personal allowance for people aged 65-74 (1)</p></div></th><td valign="top"><div align="left">

7,280</p></div></td><td valign="top"><div align="left">

7,550</p></div></td></tr><tr><th valign="top" scope="row"><div align="left">

Personal allowance for people aged 75 and over (1)</p></div></th><td valign="top"><div align="left">

7,420</p></div></td><td valign="top"><div align="left">

7,690</p></div></td></tr><tr><th valign="top" scope="row">

Married couple's allowance (born before 6th April 1935 but aged under 75) (1) (2)</p></th><td valign="top">

6,065</p></td><td valign="top">

6,285</p></td></tr><tr><th valign="top" scope="row">

Married couple's allowance - aged 75 and over (1) (2)</p></th><td valign="top">

6,135</p></td><td valign="top">

6,365</p></td></tr><tr><th valign="top" scope="row"><div align="left">

Income limit for age-related allowances</p></div></th><td valign="top"><div align="left">

20,100</p></div></td><td valign="top"><div align="left">

20,900</p></div></td></tr><tr><th valign="top" scope="row"><div align="left">

Minimum amount of married couple's allowance</p></div></th><td valign="top"><div align="left">

2,350</p></div></td><td valign="top"><div align="left">

2,440</p></div></td></tr><tr><th valign="top" scope="row"><div align="left">

Blind person's allowance</p></div></th><td valign="top"><div align="left">

1,660</p></div></td><td valign="top"><div align="left">

1,730</p></div></td></tr></tbody></table>

 

RE: I thought that income tax wasn't what you pay on things that you buy

At school I was taught all about photosynphesis, how to tell the difference in the flame of different chemicals and metals, how to draw the human face properly, how to speak french, pythagoras' theorem and trigonometry, exactly how king harold died a century ago but was never taught anything about current affairs, pensions, politics, savings or anything financial really.

So should my career take me to another country, involve lighting several chemicals for a living, or working out the length, area etc of a circle or avoiding getting an arrow in my eye then I'm your man. I wont however have a fecking clue what to do with the money that I earn.

 

As a rough guide you normally pay no tax on first £5K,

10% on between &pound;5K and &pound;7K and 22% on anything above to about &pound;40K.</p>

Now it will be no tax on first &pound;5K and 20% on anything above to about &pound;43K.</p>

Helping out the middle income earners it's called.</p>

 

RE: As a rough guide you normall pay no tax on first £5K,

except that the abolishion of the 10% band occurs one year before the reduction in the rate from 22% to 20%.</p>

Raises approx 9billion for Gordie in 2007/08</p>

 

so you're allowed to earn £5,225 tax free and then a further £2,150 at 10% tax then everything else upto £33,300 at 22%. Is that how it works now/worked before?

And after the change you'll still be able to earn so much tax free but then everything after that right up to £42k (i think that was the figure) will be at 20%?

 

cheers nt

 

ignore that, mr blackadder has just answered it below t nt

 

Really!. Missed that bit.

The dirty barsteward!

 

Forget it, we will ALL be worse off : FACT (banghead)

 

RE: Really!. Missed that bit.

"removing the 10 pence starting rate of tax and cutting the basic rate of
income tax from 22 pence to 20 pence from April 2008"

Thats the relevent line from the full budget report I think. Does that mean that both will change in 2008 or is it a carefully written line saying that 10 changes now and the other in 2008?