Personal allowance frozen - yet 2p off National Insurance

[MikeRafone]

AIBU to think that instead of reducing the tax on NI that the personal allowance raising a couple of hundred pounds would be better for less well of families and pensioners?

PA is frozen until 2028 whilst the last budget knocked off 2p on NI and suggested the same will happen today another 2p

whilst income tax will rise for many as NMW rises in April by £1.01

AIBU no PA shouldn't rise and 2p is ok of NI
YANBU PA should rise and leave NI as it is

A small threshold change won’t help middle earners enough. £10 extra a month won’t go far when nurseries are up £50-£200 a month, mortgages up hundreds too plus no help from benefits for childcare or anything else. Any tax cuts need to be directed to the middle who are just above the benefit thresholds. That’s not me, I’m not advocating all help goes to people in my situation!

We haven't got the money, as a country, to fund a tax cut.

The NI cut is a bit of a gimmick to make it seem that we're doing something, because we do need to do something - but we also can't afford to.

@YouveGotAFastCar

"We haven't got the money, as a country, to fund a tax cut. "

+++

Exactly and if somehow we do have the money then I would rather it is used to either reduce the national debt or fund education.

It is insane that we spend more money on just the interest payments on the national debt than we do on education.

All chancellors for the next couple of decades will be wearing the handmade shackles the Truss/Kwarteng dream ticket put on the economy. With every passing month (and I've had to hear it at work) people are coming off their fixed rate mortgages and having to find a few extra hundred quid a month.

Totally this, this is ever only going to be a budget to try and gain votes for the next election. They don't actually care if they send the country onto more deta they just want to be voted back in.

Unfortunately most of the voting population will fall for it.

If you have many people with money to spend the economy will grow, if you have only 1% of workers with money to spend or even 5% the economy will falter

if the economy grows everyone wins

There are ways of doing things so everyone propers not just the high earners - that’s not disdain for high earners

this is ever only going to be a budget to try and gain votes for the next election.

An election that the Tories will lose no matter how much of our money they spaff all over the place. That's what makes it so criminal.

If you're on NMW you'll benefit from the NIC reduction as NMW is roughly £20k p.a., so with the threshold at £12.5k, you'll be paying NIC on £7.5k of your wage.

Rather than always concentrating on tax and public spending, this NIC cut could actually grow the economy as it's whole purpose is to "make work pay" to encourage currently economically active people to work, and part timers to work more - if that works, it will get the economy moving again rather than the stagnation we've been suffering for years with staff shortages in key areas.

@taxguru yes I get that. On at least three threads this week I've seen
"Low earners will be topped up anyway"
"There's a massive amount of help and benefits for those with disabilities/health conditions"

Neither of which are true if
You don't have children and you have a mortgage
You don't qualify for PIP because you're too well to get PIP but too sick to work extra hours on top of what you already do

We all know bribing gullible people with a 2p tax cut isn’t going to grow the economy or “make work pay”. If there’s headroom in the Treasury better by half spend it on reducing HS waiting lists to get sick people back to work.

More money in our pockets to spend is always a good thing as we are choosing what to spend it on not being forced to spend it on public services.

For those on the borders of income tax thresholds it likely won't make much difference to what they pay in tax vs what they put into pensions. So the government gets the headline, helps PAYE, and actually keeps a good proportion of the income as people will hide slightly more in pensions (which is taxed years down the line) vs them hiding raising thresholds so people pay less tax overall

They feel politically that they have to cut a tax but they can't afford to cut income tax (or at least slow the rate fiscal drag is increasing it) so here we are.

Even if they were forced into it, it's not a terrible outcome. Cutting a tax on work isn't the worst thing to do in a productivity crisis. And NI is a horribly flawed tax that should have been folded into income tax long ago.

And NI is a horribly flawed tax that should have been folded into income tax long ago.Edited

but won't be as its 2% once you reach £50,000 not the 10% rate under £50,000, folding it into income tax would mean a very large jump of 38% for those earning over £50k

That wouldn’t happen. It would require a complete reorganisation of the tax system that would cost billions and be politically suicidal. It’s never going to happen.

Robbing McPeter to pay Paul

https://www.msn.com/en-gb/money/other/panicked-tories-talked-down-scottish-tory-leader-amid-fears-he-was-on-brink-of-quitting-over-budget/

To be honest I think this is another step in a plan to gradually phase out the State pension.

No! I work hard for my money. Are you going to help me save for a deposit as I am 42 and still renting!

Why?

And still be worse off….
The NI cut is more than offset by the frozen PA which is a tax raise.

No one is going to work more hours for an extra ~22p an hour on NMW. 🤪

Especially when you add in the UC offset of £6.45 an hour over the earnings limit. If anything, some low paid workers on UC will have to reduce hours.

edited because maths in my head isn’t working as fast as it usually does

This is simply not true. I earn £17,800 a year and have zero benefit entitlement. Anyone without children under 18 has to be on very little to get benefits.
NI reduction will have a minimal benefit to me.

The two NIC cuts of 2% each will save you £200 per year on that wage. That's not "minimal".

The NI cut is much cheaper. There simply isn’t headroom to increase personal allowances.