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

My DH is on minimum wage and we do not get benefits.

Anyone working more than 3 days per week (FTE) on minimum wage will benefit from the NIC reduction as it applies to anyone earning more than £12.5k per year which is roughly 3 days per week at current NMW levels.

It's odd, though, the idea of benefiting from a tax but when in reality taxes are higher than at any time since 1949. According to Fiscal Studies Institute on channel 4 tonight.

@taxguru I know they will, but very little. I will get a tax reduction of £4 a week. More than many of you will spend on a coffee.

I agree. It’s trying to grab a few more votes for the election. OBR has said they’d have to reverse the NI cut after the election to avoid cuts to public services.

I am disappointed that the entire Spring budget, including the NI cut doesn’t help the demographic most likely to be in poverty- the disabled who cannot work. Many are on disability or armed forces pensions or benefits and are being disproportionately affected by the cost of living, housing and NHS crises.

Instead, the government has decided to crack down on the disabled and unable to work.

I must say that it makes a refreshing change for policy not to be written around sucking up to pensioners.

Sorting out the 60p marginal rates might improve productivity enough to be revenue positive. They should have looked into it.

It's not contempt its about partity.
I say that as a higher earner. I give more to charity but think really I should pay more in taxes. I saved £740ish quid as a result of changes today my BIL only £40ish as he is a low income (due to health). Think that is shite as we are much better off. I will save my extra bit. He would have spent every penny (hence bumping the economy).

@DdraigGoch Its funny how high earners always have to be bribed into being more productive, while the poor always have to be punished into being more productive.

whereas had £200 been added to the income tax PA it would be £200 across the board

Any change in PA wouldn’t give anything to folk in Scotland, who pay significantly more tax already. Reducing NI means folk north of the border gain a little too.

When they started working, base rate income tax was not far off 30%

yet I keep hearing I’m paying higher tax at 20%

how come we are paying more tax now?

To me paying 29% tax was higher

The ratio of workers to pensioners would be fine IF there were not 6 million people of working age who contribute very little to the tax coffers - if at all. They too have had increases in the amount they receive in benefits and should be working as the said pensioners did when the safety net of benefits was minimal.

You do realise - the encouragement to have children - given how generous benefits can be if you have children - is not to help the pensioners of today trying to survive on less than 20K per annum (we will be long gone) but to look after you - gen x and millenials when you reach pesuion age.

The so-called triple lock argument takes no account of the fact that 8% of a state pension of £12Kpa is very little (and that is the generous 'new' state pension.)
Pensioners have to pay VAT, income tax and council tax and cannot increase their income.

Removing a disincentive is not the same as offering an incentive (or a "bribe" as you put it). Say you were offered a promotion or some overtime, yet you would only see 35% of the money, would you bother with the added hassle?

I've got no skin in this myself, I'm a basic rate taxpayer.

It’s a bit of a luxury to be able to say you’d rather have nothing than 35% of something, wouldn’t you say? There was a time when becoming a higher rate tax payer was regarded as a measure of success, freezing the thresholds has obviously changed that.

If you’re earning minimum wage then you’re probably entitled to Universal Credit and should claim it. The problem that 40% of benefit claimants are in work is just that - work should pay enough for people to live decent lives and it doesn’t.

It's not "nothing or 35%" though is it? It's "free time to spend with your family or 35%".

You might alternatively do the hours but increase your pension contributions to keep your taxable income below the threshold.

It's not merely about the higher rate of tax, it's the withdrawal of benefits and allowances that push the marginal tax rate above 60%.

In Scotland the marginal tax rate at £43k is 50%, before yesterday’s NI reduction is was 52% on a good salary but not particularly high.

@Penguinmouse no I'm not entitled to UC

Apparently a family on 80k will see a tax saving of over 5k, someone on 25k or below, almost nothing.

Easy to see why the Tories went for this tax cut.

Whilst at the same time the NHS budget, in real terms will see a decrease.

Thats not true at all, no single person on NMW would get any UC help and that inc many older people who are facing very rent increases.

@Penguinmouse Even a couple with children both on full time minimum wage are unlikely to be eligible for benefits except child benefit, unless their children are younger and need paid childcare or they live in a very high rent city.
Most people on national minimum wage live on that wage. And childcare is only paid for low earners because it keeps people in work, so the government do not have the issue of trying to get a parent (usually a mother) back into work when she has not worked for years.

About three-quarters of working-age benefits are spent in one of three ways:

• Tax credits, mostly topping up the incomes of families with someone in paid work, but on modest earnings
• Housing benefit, helping low-income people meet the cost of rent
• Disability, incapacity and sickness benefits, for those whose health limits their ability to work or adds to the cost of living

Most people getting tax credits do not have two people people working full time.
Lots of people, including me who are on low wages only get statutory sickness. So if we are off ill we are counted as getting benefits.

means tested state pension