The Budget 2015 – 12:30

Raising the personal allowance from £10,600 to £11,000
Click to expand...

Woohoo! A pointless £6.66/month pay rise that will cost the treasury £billions without making a major difference to anyone's lives!

Duty cut on beer and cider
Click to expand...

No doubt like last year it will make a meagre difference to the price of a pint while costing the treasury a fortune. Another pointless tax cut.

£1m inheritance tax break on properties passed to children
Click to expand...

Another tax cut that will cost the treasury £billions. Wicked. Exactly what we need right now.

Increase in NI threshold to help lower paid workers
Click to expand...

Could be interesting when combined with the increase in the income tax threshold, if the total is significant.

The scrapping of the annual tax return and introduction of 55 million individual online tax accounts
Click to expand...

Given Universal Credit has been a roaring success, it's definitely time for another major government IT project :rolleyes:

New loans for students targeted at those from poorer backgrounds
Click to expand...

Because there isn't enough positive discrimination at University for 'poor' students...

Further crackdown on tax evasion
Click to expand...

Yawn
 
Just be thankful they haven't done what they should have to quell the deficit.

Kemik said:
The problem is, and with all due respect to the micro businesses, the people submitting the numbers won't be trained. The numbers are likely to be incorrect in nature (e.g. expense vs capital expenditure), when to recognise income, etc. This will only lead to an audit if they then have to go back and change things.
Click to expand...

I foresee a considerable amount of problems arising. My tax returns still stump me, I always end up with a different figure than my accountant :(. However I tend to like paying his figure more :D.
 
Last edited:
Someone earning £15000 vs £40000 will gain 2.5:1 as a percentage of income for every £1 change. This is not percentage of tax paid vs income. Clearly highlight the change of tax paid vs income and it shows lower earners will gain the most from personal allowance changes.
 
Just a note, they tend to reduce the 40% band when they up PA. Net impact is nil for 40% tax payers.

The 40% band has now changed from its original intention of taxing the rich. More and more people fall into the band when they shouldn't be. E.g. a graduate with student loans on £41,866 will pay a marginal tax rate of 51% (i.e. 51p in every additional £1 earned goes to the Government). Not sure that is particularly fair but that's a different discussion.
 
delta0 said:
Someone earning £15000 vs £40000 will gain 2.5:1 as a percentage of income for every £1 change. This is not percentage of tax paid vs income. Clearly highlight the change of tax paid vs income and it shows lower earners will gain the most from personal allowance changes.
Click to expand...

You're ignoring a number of factors that mean that it is not so simple as you imply:

1. The lowest income households don't have anyone earning over the original threshold anyway so they cannot be helped by these changes.
2. In order to gain the full amount you need to be earning above the new threshold but this is not true for many low income individuals.
3. Because taxation is levelled at the individual level and more higher income decile households have multiple earners, they garner the benefit more than once. This effect is most pronounced if one earner is close to the threshold.
 
Kemik said:
Just a note, they tend to reduce the 40% band when they up PA. Net impact is nil for 40% tax payers.

The 40% band has now changed from its original intention of taxing the rich. More and more people fall into the band when they shouldn't be. E.g. a graduate with student loans on £41,866 will pay a marginal tax rate of 51% (i.e. 51p in every additional £1 earned goes to the Government). Not sure that is particularly fair but that's a different discussion.
Click to expand...

Which is why they are talking about upping the 40% threshold to £50,000 over the term of the next parliament
 
Mr Jack said:
I'm unconvinced it's even in our benefit; at most we're prolonging the period over which pain must be felt. I also feel that as one of the world's richest nations it's important that we take a lead on these matters.
Click to expand...

Problem is if a country takes the lead and takes the first step they just end up hurting themselves economically as everyone else continues to use oil & gas. Unfortuantely the knock on effect is that it impacts negatively on the population, so it's a difficult political decision. Especially if you consider a large part of the voting population could be dead in 30-50 years when you'd reap the most rewards from taking the first steps.
 
Mr Jack said:
You're ignoring a number of factors that mean that it is not so simple as you imply:

1. The lowest income households don't have anyone earning over the original threshold anyway so they cannot be helped by these changes.
2. In order to gain the full amount you need to be earning above the new threshold but this is not true for many low income individuals.
3. Because taxation is levelled at the individual level and more higher income decile households have multiple earners, they garner the benefit more than once. This effect is most pronounced if one earner is close to the threshold.
Click to expand...

If they earn less than the personal allowance then yes they do not benefit as much from this change. Lowest income earners just got a minimum wage rise, so all full time employees will be over the allowance.
 
alx said:
Problem is if a country takes the lead and takes the first step they just end up hurting themselves economically as everyone else continues to use oil & gas.
Click to expand...

I actually think the economic costs are overstated and the benefits understated. Act now, and we could establish ourselves as global players in the renewables and electrical cars sectors, sit on our hands and we'll simply import from foreign companies who have developed the technologies ahead of us. Meanwhile many of the most important steps are natural goods: energy efficiency is worthwhile, climate change or no, whilst adopting renewables frees us from the need to acquire globally contended resources and insulates the economy from the shocks inherent in fluctuations in those prices.

But change is scary, innit?
 
estebanrey said:
How does that work given 99% of the time it will only be one parent. It's unlikely both parents will die at the same time and presumably when the first one goes full ownership passes to the surviving parent no?

Genuine question and realise I'm probably being thick!
Click to expand...

As freakbro said, it'll work the same way the current £325/£650k allowance works. When the first spouse dies the allowance of £325k gets transferred to the surviving spouse. After the second spouse dies the allowance for the entire estate is £650k, +£250k extra if a main home is being passed down to the immediate children.

At least that's what the rumours are saying.
 
Mr Jack said:
No. It doesn't. Look at the graph I posted immediately before your comment, here it is again, the black line is percentage:

income_deciles2_zpspkjsyzyu.gif


And the situation is worse for continued rises. As a percentage, these increases don't benefit low income households the most and as a proportion of the money spent very little goes to low income households, with the majority going to middle-to-higher income households, and is thus a very ill targeted change if the aim is to aid lower income households.
Click to expand...

How would you do it instead (without giving people more money)?

A reduction in VAT would be a good bet, or at the very least removing VAT entirely from more products.

My feeling is a high tax free allowance, with a higher, flatter rate of tax on anything above it. Yes the "higher" income earners may benefit but it's a fairer system and would allow a "living allowance". The tax free allowance should be in the region of the cost of the basic cost of living (food, accommodation, clothing), i.e. just a bit above the living wage. I'd argue something like a £15k tax free allowance and then a 30% (or rate to balance the books) rate with the potential for a 10% variance for higher earners (I.e. 30% for £15,001 to £50,000 and 40% for £50,001 and over).
 
alx said:
We never defined what "long term" meant ;). I was talking about the next few decades.

You're right, the world oil production isn't a problem, but the tax cuts are for the (selfish) benefit of the UK, it's relative production and protecting an industry.

Unfortunately it's human nature that need necessitates change, and I fear the same will occur with regard to renewables/climate change (there's not enough 'need' at the moment for people to care enough about making bit step changes).
Click to expand...

Especially with oil price at where it is now.

Higher oil prices benefit both the oil industry and renewable investment. The higher the competing energy cost (oil price) the less subsidy renewables need to be cost effective and the more likely we are to build renewable sources of energy.

What we really need is a wholesale upheaval of the housing market, with regulations forcing new homes to be built with xkw of electricity generating potential. Essentially forcing new homes to have 4kw of solar panels on the roof of each house as well as/or a ground source heat pump.
 
Wow, everything in the economy is so rosy in The World according to Garp George, it makes you wonder why there has to be such austerity measures against public services to come....
 
Kemik said:
Will be interesting to see how they propose "scraping" the annual tax return. I envisage it will import as much data as they currently have but things like self employment income, deductions, etc isn't something that is easy to do.

They plan on linking business accounting software to their systems but how do people know if an expensive is deductible or if it qualifies for the various allowances if they don't have an accountant?

As an accountant quite a few of my colleagues are holding out to see how this affects us. In reality, the system would fall apart without us at the minute.
Click to expand...

The best part about scrapping annual tax returns will be (I hope) no more excruciating radio adverts in the run up to 31 January.

Perhaps the self-employed will have to report monthly earnings and somehow operate a kind of PAYE on themselves.....? You heard it here first.
 
You must log in or register to reply here.
Back
Top Bottom