So, last week Gordon Brown delivered what is widely touted as his last budget before becoming Prime Minister. And as I’m sure all interested parties have heard, he left a stonking great big change until the end of his speech. The basic rate of tax has been lowered by 2p in the pound to 20%. Hooray!
Well, all the commentators pointed out that we’ll be paying for this with the abolition of the 10% tax band. Still for people in my income bracket (earning between about Â£18,000 and Â£33,000) we’ll be better off than before. For those paying income tax, but earning less than about Â£18,000 you’ll lose out and be slightly worse off than before. Earning between Â£33,000 and Â£39,000 will see you worse off due to changes in NI bands, and earning between Â£39,000 and Â£43,000 will see you better off as the higher rate tax threshold has been raised. Earning above Â£43,000 and paying higher rate tax should see you paying close to the same amount in tax and National Insurance combined.
I’m not sure that I see the point of this tax change, even though it makes me better off. Its not a Robin Hood style tax cut (taking from the rich to give to the poor) as the benefits are unevenly distributed. I guess the tax-cutting headlines look good though. It certainly seemed to take the wind out of the sails of the Conservatives, which is probably the main target.
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