Budget 2007
Mar. 21st, 2007 02:42 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ewx[Poll #951035]
My back-of-the-envelope calculation suggests that the break-even point is around £18,600: you win by about 2p on every pound you earn above that, and lose below it.
There are benefits changes at the bottom end which presumably ameliorate the doubling of 10% rate to some extent (e.g. working tax credit) but I'm afraid I don't know how those benefits work, so if you're affected by those you'll have to work it out yourself.
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Date: 2007-03-21 02:59 pm (UTC)(no subject)
Date: 2007-03-21 03:00 pm (UTC)(no subject)
Date: 2007-03-21 05:00 pm (UTC)(no subject)
Date: 2007-03-22 09:01 am (UTC)Did I hear the upper limit on NI contributions also went up? I imagine I'll be roughly where I was, then...
The BBC's calculator makes me&L together 380/yr better off, and that's putting my car in as band F, which may be pessimistic, but the MOT cert is filed "somewhere" so I couldn't check. Anybody know what VED band a Y reg 1.8 Honda Accord typeS is? Cost me 190 last time.
(no subject)
Date: 2007-03-21 03:05 pm (UTC)I like the ISA raise, I assume that applies from this April?
And the Inheritance tax threshold is a long overdue rise given real estate prices. Although I'm not generally in favour of inheritance, so I'm not sure I like that much.
Selling off student debt was rumoured, but I can't see if it is true...
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Date: 2007-03-21 03:08 pm (UTC)(no subject)
Date: 2007-03-21 03:12 pm (UTC)(no subject)
Date: 2007-03-21 03:28 pm (UTC)(no subject)
Date: 2007-03-21 03:35 pm (UTC)(no subject)
Date: 2007-03-21 03:44 pm (UTC)I'm aware of the normal process of selling of debt in this way (I'm reading Stevenson, and Eliza has explained it all in very short words for the reader's benefit)... but this is debt that *I* owe, so I'm naturally more worried about it *grin*.
(no subject)
Date: 2007-03-21 04:18 pm (UTC)(no subject)
Date: 2007-03-21 04:36 pm (UTC)(no subject)
Date: 2007-03-21 04:28 pm (UTC)Nor is it clear what happens if the bonds default: the bondholders sometimes acquire the authority to replace the administrators of a failed asset-backed securities' collateral pool. However, that's a management issue which would probably manifest itself in the pursuit of arrears: the assets in the pool (namely: your loans) would remain the same - same interest, same repayment terms. The 'tail' of derivative securities does not wag the pool of assets, even if they do indeed turn out to be dogs.
(no subject)
Date: 2007-03-21 03:06 pm (UTC)(no subject)
Date: 2007-03-21 03:06 pm (UTC)I still think Brown is a good thing, though. But he could usefully do something about the marginal effective tax rate of working tax credit withdrawal, which is a much bigger zog than a pound here or there. Not that I'd be remotely afloat at all without tax credits; abolishing them would be precisely the wrong thing to do.
(no subject)
Date: 2007-03-21 05:26 pm (UTC)…and it looks like he's put that up by 2% — marvellous.
I can't see what's to be gained by abolishing the lowest tax band — it makes the system less progressive (and it seems that Menzies Campbell has already made this point).
(no subject)
Date: 2007-03-21 05:39 pm (UTC)The consequence is a tax cut for somewhere around half the earning population. Obviously whether that's a "gain" depends on your point of view.
If you're selfish and in that half then the answer is clear; if you're trying to win the next election then the same might be true, depending on your analysis of voter behavior. Combined with the NI/40% alignment, fans of simple tax systems might think it a gain, though they should also consider that simplicity is not the only goal if they're not using "simplicity" as a socially acceptable code-word for "regressive".
I wonder how well a smoothly rising tax rate would work with no steps - for instance a linear growth from 0% to some maximum rate between two income levels - would work. Possibly only the mathematically inclined could love it.
(no subject)
Date: 2007-03-22 09:06 am (UTC)(no subject)
Date: 2007-03-22 12:17 pm (UTC)No, I don't think that's right. Under the old rules, from a marginal pound I paid 22p tax and 11p national insurance and 37% of 67p tax credit withdrawal. Under the new rules it's 20p tax and 11p NI and 37% of 69p withdrawal. I think I come out ahead by a penny and a quarter in a pound.
(no subject)
Date: 2007-03-22 12:32 pm (UTC)(no subject)
Date: 2007-03-22 12:36 pm (UTC)(no subject)
Date: 2007-03-21 08:53 pm (UTC)It's a shame tax credits are such a confounded nuisance to deal with, actually. They've recently sent the final calculation for the 2004 tax year, and my inclination to look at it is negative.
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Date: 2007-03-22 06:44 pm (UTC)(no subject)
Date: 2007-03-21 03:13 pm (UTC)(no subject)
Date: 2007-03-21 03:32 pm (UTC)Something's shifted on NI thresholds; I lose a third of what I 'gain' in lowered income tax.
Overall, it's neither high enough nor low enough to affect my vote: a couple of hundred pounds is neither here nor there.
So what would change my mind? This budget has no effect in removing perverse incentives at the bottom end of the labour market: it may well be that the most positive result of Gordon Brown's move next door will be the promise of a new Chancellor without the petty vindictiveness, and the irrational loathing of Frank Field that has distorted all attempts at a co-ordinated reform of taxation and welfare. We still need to eliminate 'traps' and the absurdly high confiscation rates for people attempting a transition from low incomes (especially with housing benefit) to a moderate wage.
I would vote Conservative - or even Communist, BNP or Lib-Dem - if there was talk of rolling back the ACT credit botch that has permanently damaged everybody's lifetime finances through it's pernicious (and little-publicised) effect on life and pension funds. Taking the Big Picture, Gordon may have delivered macroeconomic stability but he has also implemented regulatory uncertainty and unnecessary compexity; another Nigel Lawson will be needed, taking a machete to the 365-page monster that is this years' Finance bill and reducing it to something that delivers 'Simple, Compulsory and Low' taxation.
Or even 'simple, compulsory and higher' taxation: buried in all that complexity, I suspect that there are many subtle and damaging distortions, far worse than ACT or even the uncertainty over settled trusts that marked out Gordon Brown as the ill-advised administrative ninny that he really is.
Maybe I should blog this under my own banner. It'll distort the debate on your blog
(no subject)
Date: 2007-03-21 03:35 pm (UTC)(no subject)
Date: 2007-03-21 04:59 pm (UTC)(no subject)
Date: 2007-03-21 05:19 pm (UTC)£18,605 is based on the 2007/08 figures (personal allowance £5225, 10% on the next £2230).
£18,605 = £5,225 + £13,380 = £5,225 + £2,230 + £11,150 and 0.2 * £13,380 = £2,676 = 0.1*£2,230+0.22*£11,150.
Also ignores NI; if there's a change to NI below the current UEL then I missed it.
(no subject)
Date: 2007-03-21 05:38 pm (UTC)(I also used the 2006 10% band, but that's minor)
(no subject)
Date: 2007-03-21 07:22 pm (UTC)Doesn't help us - our joint income would get us almost to that figure (it's not worth bothering to claim a fiver of tax credit, really!) since AFAICS working tax credits are assessed for couples rather than individuals. We will, however, pay more than £300 more tax a year than before with these changes.
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Date: 2007-03-21 05:28 pm (UTC)(no subject)
Date: 2007-03-21 05:29 pm (UTC)(no subject)
Date: 2007-03-21 05:51 pm (UTC)(no subject)
Date: 2007-03-21 06:11 pm (UTC)(no subject)
Date: 2007-03-21 10:09 pm (UTC)(no subject)
Date: 2007-03-21 10:20 pm (UTC)Not particularly impressed, either way, though.
You missed 'I don't get it'
Date: 2007-03-21 10:19 pm (UTC)Re: You missed 'I don't get it'
Date: 2007-03-21 11:15 pm (UTC)Currently you pay no income tax on the first £5K or so of income; you pay 10% (starter rate) of the next £2K or so; and 22% (basic rate) of the rest, assuming you're not earning enough to reach the 40% (higher rate) threshold.
This ignores national insurance, which is an additional tax-by-another-name with it's own system of thresholds and rates.
Among the notable changes in this budget are that the 10% and 22% bands are replaced by a single 20% band (which mostly just shifts around who pays what a bit), and that the NI thresholds are brought somewhat into step with the income tax ones (which takes a little more from higher earners and slightly simplifies the tax system as a whole).
Re: You missed 'I don't get it'
Date: 2007-03-22 11:26 am (UTC)OK, I'll bite :-)
Below the Earnings Threshold (£100 per week on 2007-08) you pay nothing. Between the ET and the Upper Earnings Limit (£670), you pay 11%. Above the UEL you pay 1%.
Employer's contributions are 12.8% on everything above the secondary Earnings Threshold (also £100).
If you contract out of
SERPSthe State Second Pension the rates change, all bets are off, and the poor sod that does your payroll will HATE YOU FOR EVER. Similarly, if you are self-employed, ignore all this - it's a flat £2.20 per week, plus 8% of your profits within certain bands.If you're paid monthly or in some other interval, the same thresholds apply but in a scaled form. Masochists should peruse CA38 (http://www.hmrc.gov.uk/nitables/ca38.pdf), and marvel at the byzantine process described therein, which has to be applied for each and every employee.
Baroque? Rococo? What's the next superlative?
Re: You missed 'I don't get it'
Date: 2007-03-22 01:01 pm (UTC)Re: You missed 'I don't get it'
Date: 2007-03-22 02:02 pm (UTC)(no subject)
Date: 2007-03-27 04:11 pm (UTC)