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The 2009 Budget £100k-£112 earnings stealth tax (personal tax allowance wiped !)

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    The 2009 Budget £100k-£112 earnings stealth tax (personal tax allowance wiped !)

    Ok, I heard the budget news briefly regarding the budget this week but I've now had a few minutes to do some further digging, reading around I am starting to get a very ugly picture of this government:-

    Basically from what I gather the UK basic tax allowance is around £6K (that's the amount of money you are allowed to initially earn which you will not be taxed on). BUT according to the budget 2009, new tax laws will mean that for any gross earnings above £100K, every two pounds that you earn will eliminate £1 of your initial £6K personal tax allowance (tax free) meaning that if you earn £112K you don't get that initial £6K tax allowance any more. This means that the effective tax rate from £100K to £112K is around 60% !!!! (drop my Bacon sandwich !)

    Is this true or have I misread this ? is this tax law in effect right now for tax year 2009-2010 ? or does it only START being law April 2010 ?

    Is there any end to this UK government taking the incentive out of the private sector, the only one's who can start pulling us out of this mess ?

    here is one of the links that states this in the main points:

    http://www.shoosmiths.co.uk/news/2209.asp

    #2
    Originally posted by eliquant View Post
    Is there any end to this UK government taking the incentive out of the private sector, the only one's who can start pulling us out of this mess ?
    They've got another budget to be delivered just few weeks before elections...

    Comment


      #3
      Some would argue that its the private sector that got us into this mess ie what Obama and Brown refer to as the Shadow Banking Sector.

      Comment


        #4
        Originally posted by AlfredJPruffock View Post
        Some would argue that its the private sector that got us into this mess ie what Obama and Brown refer to as the Shadow Banking Sector.
        So, it wasn't the people who were taking out stupid morgages in order to buy houses that they would resell later at great profit?

        Not the TV programs (including on BBC) who have shown how "easy" it is to make lots of money by borrowing to buy houses?

        The bankers are sure guilty as charged, but ultimately it was the people who have chosen to keep their eyes and brains shut.

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          #5
          It is fortunate for the leaders that the people do not think.

          I think it was Blair who said that ?

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            #6
            Originally posted by eliquant View Post
            Is this true or have I misread this ?
            Nope. You've got it about right.

            A ridiculous overcomplication to an already heavily complicated tax system.

            The whole point of a tax free allowance is that everyone gets it. To gradually reduce it as you earn more is a stupid way of getting more tax.

            If the government think people on 100K+ should pay more, then introduce a 45p band between 100K-150K, which will probably earn the same amount.

            Also, it (the personal allowance change) was first announced in the pre-budget report, so isn't new to this budget. In the pre-budget report, the 45p band was announced for 150K+. If they'd have just started the 45p at 100K and left the personal allowances alone, it would have been so much simpler...

            But no, they have to go for the most complicated method because it's so much easier to hide in amongst the detail.

            Comment


              #7
              Income tax is the most difficult thing to understand

              Albert Einstein

              Comment


                #8
                Originally posted by AlfredJPruffock View Post
                Income tax is the most difficult thing to understand

                Albert Einstein
                The thing is - it doesn't need to be complicated. The whole thing could be simplified to a fraction of it's current complexity.

                Raise the personal allowance and get rid of tax credits (what's the point in taxing the low paid, then giving the money straight back to them - don't bother taking it from them in the first place )

                Abolish NI and convert it to income tax (including employers NI, but compell employers to pass on the amount as extra salary).

                And re-jig the bands and tax all income - CGT, divi's all on the same bands. If certain groups need supporting, they can get extra personal allowance. That should be the method of targeting relief.


                The main problem is that with exceptions on exceptions, there will always be some group of people that will be worse off - look at the 10% tax band fiasco.


                There - just sorted out next year's budget...

                Comment


                  #9
                  Originally posted by centurian View Post
                  And re-jig the bands and tax all income - CGT, divi's all on the same bands. If certain groups need supporting, they can get extra personal allowance. That should be the method of targeting relief.
                  Gordon Brown did one (probably the only) good thing in his time - he gave CGT tax relief if you kept business assets for long time, that was very clever as it encouraged long term investment, particularly in your own companies.

                  However this **********er Darling removed it in his first budget, ffs, retrospectively too - *******ing unbelievable that this retrospective stuff is possible in this country, even *******ing 3rd world countries like Russia have got legislation that prevents these things from happening. After that I decided to vote in next general election and never ever vote Labour

                  Comment


                    #10
                    Don't forget also that NI will soon be applicable on all salary once the maximum band is removed which will mean a marginal rate of 61% !!

                    Comment

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