Budget / election
Discussion
I produce an Excel-based financial planning needs analysis calculator for a small group of financial advisers. Around this time of year, I do a bit of digging around the Treasury and HMRC websites, as the following year's tax rates and allowances are usually available, ready for me to issue a new version ready for April 6th
As well as the usual increase in personal allowance (up by £600) and the commensurate reduction in the 40% threshold (down to £31,785 from £31,865), I've spotted a couple of lovely little vote-winners....
Currently, there is a "starting rate" of income tax, set at 10% on the first £2,880 of savings income in excess of the personal allowance. This has been the case for six years (with the threshold indexed each year)
For 2015/16, the threshold has been extended to £5,000 AND the tax rate has been dropped to 0%
So - that's clearly targeted at the more mature voters
For the youngsters - a removal of the 2% NI rate above the Upper Earnings Limit for those under age 21 (can't imagine there will be many under-21s earning enough to exceed the UEL, but let's not let that get in the way of a good story....)
Anyone would think there's an election round the corner....
As well as the usual increase in personal allowance (up by £600) and the commensurate reduction in the 40% threshold (down to £31,785 from £31,865), I've spotted a couple of lovely little vote-winners....
Currently, there is a "starting rate" of income tax, set at 10% on the first £2,880 of savings income in excess of the personal allowance. This has been the case for six years (with the threshold indexed each year)
For 2015/16, the threshold has been extended to £5,000 AND the tax rate has been dropped to 0%
So - that's clearly targeted at the more mature voters
For the youngsters - a removal of the 2% NI rate above the Upper Earnings Limit for those under age 21 (can't imagine there will be many under-21s earning enough to exceed the UEL, but let's not let that get in the way of a good story....)
Anyone would think there's an election round the corner....
Claudia Skies said:
What are you saying, 0% tax on the first £5,000 of savings income over and above your personal allowance?
Is this for everyone?
No - its only for those (few) people whose income in excess of their personal allowance is made up solely of savings interest. if any element of their taxable income (ie above the personal allowance) is earned (or pension) income, then the Starting Rate doesn't applyIs this for everyone?
So - the obvious example would be something like retired person, with state pension of £6k, private pension of £3k and savings income of (say) £3k - total income = £12k, but the excess over their PA would have been taxed at 10% currently, and 0% after April
However, if same person had £6k state pension and £6k private pension, plus £3k savings interest, the starting rate wouldn't apply.
All sounds very noble until you realise that to generate £3k pa in savings interest would require a cash sum of around £200,000, and if said pensioner had that much in savings, they'd probably also have a pension that would take them above the personal allowance
I'd really love to know just how many people this will benefit - I'm guessing very few (ie the cost to Government is minimal, especially when compared with the votes it might secure...)
Gargamel said:
£31,725 for the 40% threshold
UK Average salary £26,500
At what point do they give up the charade and just have 0% income tax up to £20,000 and 40% on everything above.
The 20% income tax rate is a total joke
It used to be the wealthy that was taxed at 40% now it's the majority! UK Average salary £26,500
At what point do they give up the charade and just have 0% income tax up to £20,000 and 40% on everything above.
The 20% income tax rate is a total joke
chris7676 said:
Gargamel said:
£31,725 for the 40% threshold
UK Average salary £26,500
At what point do they give up the charade and just have 0% income tax up to £20,000 and 40% on everything above.
The 20% income tax rate is a total joke
It's on top of the tax free allowance so around £41k.UK Average salary £26,500
At what point do they give up the charade and just have 0% income tax up to £20,000 and 40% on everything above.
The 20% income tax rate is a total joke
TheHound said:
Your tax free personal allowance starts reducing when you start earning over £100k.
From Gov.uk
The personal allowance reduces where the individual’s income is above this limit by £1 for every £2 above the limit. This applies regardless of the individual’s date of birth.
Giving a marginal tax rate of 62%....From Gov.uk
The personal allowance reduces where the individual’s income is above this limit by £1 for every £2 above the limit. This applies regardless of the individual’s date of birth.
Nigel_O said:
No - its only for those (few) people whose income in excess of their personal allowance is made up solely of savings interest. if any element of their taxable income (ie above the personal allowance) is earned (or pension) income, then the Starting Rate doesn't apply
All sounds very noble until you realise that to generate £3k pa in savings interest would require a cash sum of around £200,000, and if said pensioner had that much in savings, they'd probably also have a pension that would take them above the personal allowance
Hmmm, just more window-dressing! [And further over-complication of the tax system]All sounds very noble until you realise that to generate £3k pa in savings interest would require a cash sum of around £200,000, and if said pensioner had that much in savings, they'd probably also have a pension that would take them above the personal allowance
king % 
ralphrj said:
BoRED S2upid said:
It used to be the wealthy that was taxed at 40% now it's the majority!
Not even close. About 15% of taxpayers (and less than half the country are taxpayers) pay the higher rate.Gassing Station | Finance | Top of Page | What's New | My Stuff