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.
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)