2p of Income Tax, so am I better off?
Posted by Ryan Cullen | Posted in Labour | Posted on 21st March 2007
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Today’s announcement that 2p will be taken off Income Tax looks good, however the BBC report that I’ll also lose the 10p band, so some back of the fag packet (excel) calculations show.
Before (according to 2007/8 figures from HMRC)
Personal Allowance £5,225 = £0
10p rate £2,230 = £223.00
22p rate £8,545 = £1,87.90
Total tax = £2,102.90
Now (using 20p and no 10p rate)
Personal Allowance £5,225 = £0
20p rate £10,775 = £2,155.00
Total tax = £2,155.00
Difference £52.10 worse off.
Pushing the correct buttons on Excel manage to show that a salary of £18,605 would result in no change and anything more would result in a tax cut.
Edit – OK for the time being I’m actually better off, forgetting to add my Council Allowance to these figures.
Looking at this PDF I can’t see any, other than at the higher end in two years.
Are there no changes to tax bands/personal allowances?
A tax cut for councillors. There’s a thought!
The devil is in the detail of tax credits, but as I noted in my post on the budget, “The budget raises taxes on low-income earners and so presumably raises the barriers to people leaving benefits and returning to work. BrownÂ’s solution is to fall back on his tried-and-tested-and-frankly-failed Tax Credits … the tax credit system is already costing £16bn and requiring 8,000 civil servants to administer. Yet last year half of the awards were wrong. Furthermore, too many of the poorest do not even claim the benefits, so complicated and obscure are they.”
Ironically, tax credits are so complex that even if they work, they won’t save Brown, who will be seen to have raised taxes on low-income workers (which, over a decade, he has!).