Just read the following on the Yahoo New pages"The government will from next April cut the basic rate of income tax from 22 pence down to 20 pence. The lowest basic rate for 75 years."
I know this might be a really stupid question but does this mean that for every pound we earn the government will take 20 pence?
2007-03-21 05:01:36 · 9 answers · asked by ¸¸.•*´`*♥Emma♥*´`*•.¸¸ 3 in Business & Finance ➔ Taxes ➔ United Kingdom
They only take this off you after you have earned a certain amount???
I think mine is £5030 cos thats my tax code? Is that correct
2007-03-21 05:07:42 · update #1
Yes, that's how tax works. If you are in the higher bracket, they will take 40p out of every pound you earn in that bracket.
It's what pays for schools, hospitals, police, defence etc.
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Further to your additional, the first £4,800 or so is tax free. The next few thousand you only pay 10p HOWEVER, he has just scrapped that part, so you will pay 20p per £ on the amound over the £4800(not sure of the exact amount). You also pay National Insurance of 11p per £ which is you contributions to your pensoin etc.
2007-03-21 05:06:13 · answer #1 · answered by Marky 6 · 0⤊ 0⤋
Yes, you're entirely right. it's £5,035 if your tax code is 503L. Your tax code will probably go up to 522L in april, meaning u have a tax free band of £5,225. After that, you will get taxed at 10% on the next £2,150 from april, and 22% on the next £31,150 and 40% on anything above that.
The new budget talks about scrapping the 10% band altogether, but reducing the 22% band to 20%, it is envisaged that the overall effect will be the same.
Hope this helps :-)
2007-03-21 17:18:40 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Yes that's right. Any earnings over and above your tax free allowance (designated by your tax code) will be taxed at 20% BUT bear in mind, he has abolished the 10% tax rate so overall, we won't be saving a lot and low earners might even pay more tax. Typical Gordon Brown - gives with one hand and takes a lot more with the other.
2007-03-21 12:14:11 · answer #3 · answered by Lynda Lou 5 · 0⤊ 0⤋
He also increased the tax allowances for working families. I'm not sure what the new tax allowance was increased too but it could mean some part time workers get a small benefit. So I'm not sure what you have to earn to be better off.
I agree it won't make much difference to middle income earners but will be a small bonus for those of us lucky enough to be in the highest tax bracket.
Bravo, for another regresssive taxation policy from our 'socialist' government....
2007-03-22 02:18:24 · answer #4 · answered by kendos 1 · 0⤊ 0⤋
Yes, that's correct.
However, he has scrapped the low band of 10%, increasing the tax for the poor - it works out the income tax will double if you earn under £7500pa, and will still be more unless you earn above £19000pa (up to the higher band).
So for most people it's a tax raise.
2007-03-21 15:35:40 · answer #5 · answered by Tom :: Athier than Thou 6 · 0⤊ 0⤋
Can everyone note that this is from April 2008 not april 2007
Personal allowance for April 07 is 5225 (tax code 522L)
All earnings over £5225 will still be taxed at 10% for first £2010 and then 22% over that.
From April 2008 all income over £5225 (or more if they raise allowance again) will be taxed at 20%
2007-03-21 12:30:06 · answer #6 · answered by Janice E 3 · 2⤊ 0⤋
Ho ho, if only ...
For every pound you earn they take about 36p at source (in Tax & NI) and another 20p in VAT & Duty on drink & Petrol etc. etc. etc.
2007-03-21 12:07:07 · answer #7 · answered by Steve B 7 · 2⤊ 0⤋
Thanks to Janice E for clearing that up.
But the person who said it's more as they take NI and Council tax is right. And VAT!
2007-03-22 08:43:09 · answer #8 · answered by Little One 4 · 0⤊ 0⤋
yes, as opposed to the 22p they currently take
2007-03-21 12:06:43 · answer #9 · answered by crazylady 6 · 0⤊ 0⤋