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New £10K Personal Allowance Poor Lose Out?

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http://www.independent.co.uk/voices/comment/the-income-tax-threshold-rises-to-10k-this-week-so-why-wont-the-poorest-workers-see-extra-cash-from-the-change-9243723.html

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Partly this is due to a lack of joined-up thinking by the Government, about the way the scheme will work with the Universal Credit benefit system that is currently being rolled out around the country. The new welfare system allows people to work and earn, but as their income increases, their benefits will gradually be withdrawn or ‘tapered’. Under the current taper levels, low paid families will gain money from the tax change, simply to find their benefits subsequently reduced.

As it stands, a lone parent family on minimum wage may see just £39 extra per year from the measure. Meanwhile, the same family on a higher wage would gain £278 per year - around seven times more than the lower earner.

Meanwhile the people most desperately in need of a solution to in-work poverty, those who earn under the threshold, will not see a penny extra from these tax changes.

Interesting so effectively the working poor don't gain from this change at all?

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It is not the "poor losing out" it is "people on benefits not gaining".

If you receive benefits you will neither gain nor lose from the increase in the personal allowance.

If you don't receive benefits you will gain from the increase in the personal allowance (unless you are a higher rate tax payer, in which case you will neither lose nor gain).

So the government is quite rightfully improving things for those who work hard for a living and earn enough to pay basic rate tax.

Good.

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The poor and ****ed

I've just added up today my gas bill + council tax, adjusted to the before tax amount is £6K.

Our house is cold and our bins get collected fortnightly. blink.gif

The public sector and the big "fuel" companies are taking everyone's money.

Something has got to give.

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if all benefits were taxed - it would be a level playing field and everyone would 'gain' (I think that may be illogical - must try harder) :huh:

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The poor and ****ed

I've just added up today my gas bill + council tax, adjusted to the before tax amount is £6K.

Our house is cold and our bins get collected fortnightly. blink.gif

The public sector and the big "fuel" companies are taking everyone's money.

Something has got to give.

Stop leaving all the windows open?

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The poor and ****ed

I've just added up today my gas bill + council tax, adjusted to the before tax amount is £6K.

Our house is cold and our bins get collected fortnightly. blink.gif

The public sector and the big "fuel" companies are taking everyone's money.

Something has got to give.

That sounds exceptionally high. Band H in Oxford in only just over £3k, and a mid range band D is half that. Do you spend more on gas than CT?

What do you mean by 'adjusted to the before tax amount'?

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Sounds good to me. Instead of an army of civil servants working out benefits, it's all taken care of (automatically) by PAYE. What's the problem?

Of course the big issue is the seriously rich aren't taxed but that is a separate issue. It doesn't stop this mess being sorted.

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I've just added up today my gas bill + council tax, adjusted to the before tax amount is £6K.

Sign up for a full-time education course and get a student exemption :)

I wonder if there are any online, full time courses that are cheap. You could then pay someone else (abroad) to do the coursework for you as well!

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That sounds exceptionally high. Band H in Oxford in only just over £3k, and a mid range band D is half that. Do you spend more on gas than CT?

What do you mean by 'adjusted to the before tax amount'?

You don't earn what your gross is you 'earn' what goes in your bank account every month

So to 'earn' 3k at 20% and calling NI 10% for simplicity you would have to earn about £4250 at 40% £6000

Pretty sobering........

Edit to match posting didn't realise they were gross figures

Edited by Greg Bowman

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if all benefits were taxed - it would be a level playing field and everyone would 'gain' (I think that may be illogical - must try harder) :huh:

Are you saying that if all benefits were taxed i would be able to operate on an equal playing field with asda, google, etc? Or that it would mean someone born to a minimum wage mother would have the same opportunities and chances in life as osborne's or milliband's son's/daughter's? I'd love to know the mechanism for this.

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You don't earn what your gross is you 'earn' what goes in your bank account every month

So to 'earn' 3k at 20% and calling NI 10% for simplicity you would have to earn about £4250 at 40% £6000

Pretty sobering........

Edit to match posting didn't realise they were gross figures

Doesn't the (Tax+NI) 'tax' rate go from 32% to 42% around about the higher rate threshold due to NI going down to 2%?

http://www.which.co.uk/money/tax/guides/national-insurance-explained/national-insurance-rates/

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Are you saying that if all benefits were taxed i would be able to operate on an equal playing field with asda, google, etc? Or that it would mean someone born to a minimum wage mother would have the same opportunities and chances in life as osborne's or milliband's son's/daughter's? I'd love to know the mechanism for this.

what I was trying to postulate - could be completely off-beam is that if everyone had a personal tax allowance - including an allowance for children (as was the case years ago and which I think is the case in parts of Europe) then anything over the tax-free amount would be taxed at the appropriate rate. so the not-working poor would have their total personal allowances against their benefits (i.e. child benefit, child tax credits, housing benefit, council tax benefit (better ignore disability benefits as they are not the same) and have tax deducted at 20% on the excess - after all this is done with state pensions which are taxable)

for the working poor the same would apply and their in-work benefits would be taxed if they were over their personal allowances.

so for example if the personal allowance was £10k and each child had an allowance of £2K a couple with 3 children would have a total tax allowance of £26K ( the benefit cap figure approx) so if their income - thru work and/or non-work (excluding disability) - was more than £26K they would be taxed at 20% on the excess or 40% if in higher rate tax - too simple?

isn't going to happen but it would be much simpler and fairer

don't quite understand why you brought Google into the discussion as they pay corporation tax not income tax. ;)

Edited by olliegog

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Under the current Tax Credits system the amount you get is based on gross income so claimants do benefit from the higher personal allowance. Bearing in mind Universal Credit (which does use net income) is dead then this article is pointless.

Edited by oldsport

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What about the many who dont work hard for a living.?

Define not working hard?

At least they are giving up their time. Some say time is the greatest wealth of all. So how much is it worth?

Yes there are hangers on, but shouldn't that fall on the business or manager to deal with?

Hundreds of thousands have got rich from doing pretty much nothing...property, bankers etc! They have more wealth than billions of people around the world will ever have in a lifetime...yes, those that give up most of their day (time) for relative peanuts!

So now how much is someones time worth relative to that?

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Define not working hard?

At least they are giving up their time. Some say time is the greatest wealth of all. So how much is it worth?

Yes there are hangers on, but shouldn't that fall on the business or manager to deal with?

Hundreds of thousands have got rich from doing pretty much nothing...property, bankers etc! They have more wealth than billions of people around the world will ever have in a lifetime...yes, those that give up most of their day (time) for relative peanuts!

So now how much is someones time worth relative to that?

My question was rhetorical. What I was really saying is how do we quantify hard work, in time spent earning a living...The term "hard working" is very subjective. A mans worth in time given up working, might be better quantified by saying , how dehumanising (or not) is his work. Did someone say life should be fair by fair remuneration.?

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Doesn't the (Tax+NI) 'tax' rate go from 32% to 42% around about the higher rate threshold due to NI going down to 2%?

http://www.which.co.uk/money/tax/guides/national-insurance-explained/national-insurance-rates/

It does I was making the numbers simple for explaining your query thats all. How is that degree in splitting hairs coming on.... ;)

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It does I was making the numbers simple for explaining your query thats all. How is that degree in splitting hairs coming on.... ;)

Apols. I wasn't trying to split hairs; just get some clarity for myself. NI is basically another form of income tax as we all know, but I find its interaction with official income tax rather strange.

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Apols. I wasn't trying to split hairs; just get some clarity for myself. NI is basically another form of income tax as we all know, but I find its interaction with official income tax rather strange.

Just joshing friend. I agree NI is just another tax. The key principle is that salaried people discuss how much they earn as a gross and most self employed people and company directors think of a net figure.

Even if you are salaried it is a good guiding principle to see what you can pay for pre tax (vouchers schemes etc)

It also explains why to a higher tax payer pension contributions are attractive no matter how rip off the charges are within reason.

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