Wednesday, May 14, 2008
Not Again !!!
Telegraph.co.uk: Income tax row as an extra 150,000 people move into higher rate tax bracket
Accountants claim that Mr Darling was "disingenuous" in his statement to the House of Commons because the starting point for 40 per cent tax will be lowered by twice as much as he told MPs, writes Ian Cowie
An extra 150,000 people will have to pay the top rate of income tax as a result of Alistair Darling's emergency budget, accountants calculate. Those affected are currently earning more than £34,800 a year but less than £36,000 in excess of their personal allowances.
Posted by plato @ 08:31 PM (666 views) Add Comment
11 Comments
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1. denzil said...
It would be difficult to make up a story that portrayed a fictional government as hopelessly inept as this Labour government actually are. George Bull of accountants Baker Tilly said,
"I am beginning to have serious doubts about whether the Chancellor understands what his predecessor did – and how HM Revenue & Customs and company pay departments are going to put into effect in September the changes announced this week."
Serious question. Is it possible for a government to be forced into an election based on a vote of no confidence or similar?
This government cannot continue. It's just like bunch of fat drunks on a stag weekend stumblng from one disaster to the next with little idea which direction they are headed.
2. uncle tom said...
I've just returned from a few days walking in Cornwall, and away from my computer, but when I heard on the radio that £2.7bn was being borrowed to sort the problem, my first thoguht was 'that ain't enough..'
3. jack c said...
The level of income needed to pay higher rate tax of 40 per cent has been DROPPED from £41,435 to £40,835. 1.1m workers will still be worse off. The £120 will not be enough to compensate them for the cut in take-home pay they suffered when the 10 per cent tax band was scrapped. This mostly affects the very low paid, earning £13,000 or less. Someone who earns just £8,000 a year, for example, is £230 worse off as a result of the disappearance of the 10 per cent tax rate, according to Price Waterhouse Coopers. Even after they have received the extra £120 they will still have £110 less in their pocket by the year end.
WHAT A BUNCH OF CLOWNS !!!!!
4. enuii said...
I've said it before and I will say it again, what this country really needs is a simple tax system that everyone understands with no loop-holes created by political frippery frappery. The current system is a complete mess and should be re-written from scratch. A simple honest system will go a long way to stop the cynical manipulation by individuals, companies and above all self serving and morally corrupt governments.
5. jack c said...
@4. enuii - you have made this point before and it is indeed an excellent one.
I spoke to my accountant prior to the New year break - query on allowable expenses, depreciation on the motor etc... working tax credit and child tax credits entered the equation and the accountant admitted (and no he's not cr*p) that due to the complexities of WTC & CTC he was a "bit lost" and would need to get back to me. It's deliberately complicated and now apparent that even HMRC staff are lost off !
6. jimmy_joe said...
"WHAT A BUNCH OF CLOWNS !!!!!"
No, this is more to do with media spin than government incompetence. They're slightly incompetent in that, when the Tories were complaining about lower paid workers being worse off, Labour didn't make enough of the Tories' opposition to the minimum wage. Because of the minimum wage, low paid workers are better off than they would have been otherwise, and with the increase in the MW this year they would NOT lose out* under the tax changes. The only incompetence the government can be accused of is in failing to get this story spun the right way by the press. Many people ended up paying less tax under the recent changes but the press comes out with half-truths like the one above about someone on £8k being £230 worse off and the sheeple lap it up. I assume that to get the £230 figure they ignore the cut in NI.
Because of the NI and Tax changes in the last budget someone on £8k would be £141.50 worse off over the year. This wage was clearly chosen because it has the worst negative effect, but they could if they wanted to have told us that someone earning £34k would get an extra £378.50. I suspect under a different prime minister this would have been the story even if the policy was the same.
* Change in take home pay after the original budget proposals: average minimum wage for an adult last year (it changes in October) was £5.435, so someone earning £8000 would have worked 1472 hours and taken home £7349.10. Average MW this year will be 5.625 so for the same hours you would earn £8280 and take home £7400.80.
There may be people earning above minimum wage and working fewer hours who still made £8000, these people will be slightly worse off but I can't imagine that there's enough of them to warrant all the fuss.
7. jimmy_joe said...
"I spoke to my accountant prior to the New year break - query on allowable expenses, depreciation on the motor etc... working tax credit and child tax credits entered the equation..."
I started my own company about a year ago and I agree that the current system is way too complicated. I worry about whether I'm paying too much or too little when I should be focusing on doing my work. 25% of all income, whether it's salary, interest, rent, dividends etc, with no "allowables" would be much easier to calculate and harder to evade. Instead of benefits and tax credits, just give £100/week to every national insurance number.
8. Ben Down said...
Jimmy_joe should be aware there are a number of people retired before the age of 65 who don't pay NI on their pension but do pay income tax. This year I have had a pension rise and am still £84 worse off than before the rise. I'm not complaining because in the main I live off dividends but for anyone who has a low income irrespective of the hourly rate is seems unreasonable to be clobbered for not earning enough to join in this new NuLab bonanza.
9. mark wadsworth said...
jimmy_joe, that's more like it, let's start from scratch - a high personal allowance helps low earners, a low rate helps higher earners, you only need to work out these two variables, if there were any justice in the world, the Labour party would be arguing for a £20,000 personal allowance and a 50% tax rate and the Tories would be arguing for no personal allowance and a 25% tax rate, but they continue to haggle over pissy stupid details.
10. jack c said...
@6 & 7 jimmy_joe - "this is more to do with media spin than government incompetence" - have to disagree on that one i'm afraid - I have just looked up incompetence in the Oxford English dictionary and it reads "see New Labour"
If the Tax system was simplified as you suggest could we then cut the numbers at the inter-related Revenue depts by say half?
11. justwatching said...
Are jimmy & mark taking the mickey?
Firstly, please jimmy, don't try to defend the glubberment because they lack spin.
What dozy Liebour chancellor could even try to alter the LOWEST tax bracket. This govn have had more spin than Shane Warne. Don't know who you are, but let's hope your seat is safe.
Mark, love the idea, not sure about the numbers. They would be fudged so the overall tax take increases, but how about 12-14K personal allowance. Then a 20% band, followed by a larger band (45%) to tax the real high earners. (over 45-50K lets say)
Jack, much more sensible. We could almost buy another northern c*ck with the savings made by abolishing tax credits. (the costs of running the system, as opposed to giving low earners their tax back)