To ask how much you think income tax will rise by?

[Wonderofwimbledon]

We’re absolutely financially at our limit… I’m so incredibly stressed. An income tax rise will break us and we won’t be able to afford it. We won’t have money to eat.

What do you think it’ll be? I just want to curl up and cry- we can’t take anymore increases our bills , mortgage everything has increased we have no spare money at all

The Labour Party are always the same. It's not a surprise. Every single Labour government has taxed people to the hilt and crashed the economy.

yes lots of people assuming that pensioners won't be hit by this budget but that is just not true.

Many have large final salary pensions and so pay tax just like a working person.

They also have savings and so are impacted by interest on them and any changes to tax free ISA allowances.

They also pay council tax and will be impacted by property taxes etc

Not saying they shouldn't be impacted. Not at all. If they have retired with good income etc and benefited from rising house prices they absolutely should get impacted.

The only thing they seem to get off with is NI but I suspect that's about to change.

I hear lots are withdrawing lump sum tax free income just now prior to the budget which I can't really blame them for.

I think most people would like the government apply some restraint on benefits, but as I’ve said in a recent post, any changes of that nature will be met by opposition and just won’t get through parliament.

I agree on the market’s reaction. Ultimately, with such a vast amount going towards debt interest, the government will have to respond to OBR warnings and because the mechanisms to restrain spending are completely jammed, the only option is to raise taxes off working people.

The trouble is if she does nothing except raise taxes this will stall growth/economy even further. So next year she will be impacted by less growth forecast in her headroom and if people lose their jobs benefits will go up and this will impact her further again.

She has to get the economy moving and growth happening otherwise she is stuffed. I agree she has to raise taxes but she needs to also cut benefits too. She needs to make it a booming economy where employers pay more to attract good talent. Higher wages means less people claiming UC and the likes and work needs to be be far more enticing versus benefits in terms of financial gain.

If she does nothing except raise taxes I think we will actually be in a worse place this time next year. Also the markets will not like it if she does not start tackling out of control costs as they will see she is getting herself into a doom loop. This will make it harder to borrow and more expensive which of course will push her into a further downward spiral.

Someone needs to give her the laffer tax curve and explain what it bloody means.

From the internet:
The Laffer Curve illustrates the relationship between tax rates and government revenue. It suggests that there is an optimal tax rate that maximizes revenue; if tax rates are too low, revenue is insufficient, and if they are too high, they discourage work and investment, leading to lower revenue

So it’s being reported fairly widely in the press:

2p decrease in NI and 2% increase in income tax on incomes <£50k. So no tax change for you earning under this amount unless retired or relying on non-PAYE income streams like rent.

BUT… over £50k the NI rate will remain the same. So a 42% tax rate from £50k.

That creates some worse rates in areas where they were already disincentives:

• with a student loan the rate from £50k is now 53% (from 51%)
• Child benefit clawback
• Removal of personal allowance from £100k now creates a 64% rate (from 62%)
• Makes the clawback period for claiming childcare hours longer too, c. £5k per child additional gross income required over £100k to break even.

I wonder what would happen if everyone withdrew all of their savings from the bank today literally everyone and held it under their mattresses for a month what would happen? People have a lot more power collectively. Or… if everyone just used one bank. Or if you everyone just stopped paying council tax… they can’t send everyone to prison? There’s so many things people could collectively do to really piss the government off. I think about this a lot.

Pensioners will definitely be hit by this budget because they’re planning on replacing some NI with income tax - that is a measure specifically designed to target pensioners.

I don’t agree that ISA allowances really impact them - if they’re squirreling away £20,000 in cash every year… that’s got to be a very small number of pensioners. Maybe because they’re loading large tax free allowances into them? Even then.

Working people is a stupid term. Salary doesn’t define a working person, working defines a working person. Even someone who doesn’t earn and volunteers is working.

DH and I earn above 45k a piece. We are not wealthy. Nobody is wealthy on less than 150k, rising to 200k if you’re in London. We’re not even comfortable.

On a practical level OP:

Can we help with your budget? I'm assuming you have stripped out all non essentials like paid for streaming services etc but some people are very good at stripping back things you might not have thought about.

Are you on the cheapest EV rate for electricity?
Are you running/charging everything possible when on the cheapest EV rate?
Have you adjusted your thermostat down one degree? Then encourage everyone to wear thicker socks/jumper etc. Can you turn the heating off slightly earlier every evening. Are you heating the hot water for longer than is really needed.
Have you checked you're on the cheapest tariff for your mobiles/broadband - lots of people are just on a BT default rate and still paying for landlines etc
Are you meal planning to reduce waste? Can you go one level down with products you buy eg moving from brand name to tesco finest to tesco standard to essentials etc. Are you adapting your shopping to buy the offers? Are you batch cooking to reduce electricity usage form the oven and can you use the microwave and air fryer to reduce electricity usage rather than putting the oven on?
Are you going old school with things like water use and ensuring that you don't use more than you have to? I know it feels ridiculous but things like reducing flushing or using bath water and a jug to flush the loo/water house plants etc can make a difference
Have you cancelled all subscriptions and old DDs
Have you looked through your wardrobe to see whether here is anything you can sell on vinted. Likewise it's a good time to sell toys on eBay.
Have you checked the points on your reward cards etc
Can you remortgage to move to a better rate or ultimately to use some equity to live on. Or could you extend your mortgage term or take a short mortgage holiday?
Can you cancel kids activities/lessons/sport and do cheaper things instead?

Can you buy things like school uniform etc in the second hand sales
Can you grow some of your own food to make life easier next year? Things like raspberries etc can be planted now and often people will be giving them away for free since they grow like weeds.
Can you shift any financial products to get a cheaper rate e.g. look at insurance renewals etc
Do you have high value items like old tech/vinyl records/curtains/vintage clothes sitting in the loft (hurts me to say it but 90s is now vintage in clothing terms and very much in demand - some early iPhones and iPods and games consoles are in demand - old perfumes can give a good return)

I know it can feel frustrating to have to do these things but you personally can't change the tax position in the short term. It will be what it will be. The only thing you can do is to adapt your lifestyle.

That’s not how banks work they don’t hold everyone’s money available to pull out on one day the money that you put into your savings account is loaned out through mortgages and loans so it’s a fine balance of day-to-day expectation of withdrawals and supporting mortgages and loans across the country, not just for Personal, but for business

Yes I can’t see my council which is one of the ones going through “devolution” at the moment making any cost savings on staff. If anything they will employ more people.

I asked ChatGPT about last last night and they looked at the cost of running the benefit system against tax we pay et cetera and it seems a sweet spot is about 5 1/2 thousand per year as a universal income with only assistance for the very very Vulnerable, which the disabled and pensioners. I did ask it how many times has it been asked about this recently and they said it’s been asked about it a lot which seems the government has been having a bit of a nosy and there too. This would stop universal credit mortgage support et cetera, and massively pay down the civil service input on benefits.

😩

I’ve heard from several sources and seen graphs showing the amount that is being withdrawn from pensions as people withdraw the lump sum is huge. People will only be able to shelter so much in one year in an ISA so in the next few tax years many older people over 57 (or whatever the age is now when you can access your pension) will be paying bank interest. The interest free allowance is also only £1k for a basic rate taxpayer. When people add their tax free lump sum to any existing savings there are a lot of funds there that will attract some tax.

And it’s true that just raising taxes is going to scupper the economy. I cancelled my regular private physio sessions yesterday. The ones I have to try and keep me mobile because the nhs provision is useless.

apart from the effect that will have on my health it affects that self employed physio. Who said her number of clients is steadily dropping.

so when she’s out a job and has to claim benefits that adds to the spiralling benefits bill. Same when the village pub closes, the clothing shops in town close, my organisation makes 20% of staff redundant, my dd’s company closed down.

And all those people out of work are spending less and it just snowballs

Interesting. I think they will increase tax by 2% and reduce NI ... to trap the pensioners!

Even Labour have uttered that you can’t grow the economy by raising taxes.

The problem is they forgot that in the budget 24 and just blew it, it impacted headroom massively. Now a bigger hole means more taxes, which will hit growth and round it goes until presumably they’re voted out.

Universal Basic Income: A Practical UK Model

What the proposal does
every adult in the UK a Universal Basic Income £6k per year (£500/month)
No means-testing. No sanction
automatically to all adults aged 18+.

What stays in place
This UBI does not replace targeted support.
To protect vulnerable people:
State Pension

✅ Keep Prevent poverty in old age

Disability Benefits (PIP/ESA)

✅ KeepNeeds-based support remains essential

Housing Support (Housing Benefit / LHA)

✅ Keep Prevents homelessness and extreme re

What UBI replaces

• Universal Credit
• Tax Credits
• Most means-tested benefits
• Administrative complexity, assessments, sanctions, job-search requirements

This simplifies the entire system, removes bureaucracy and eliminates “poverty traps”, where working more causes benefit cuts.

it possible the government are spinning figures higher than intended so when the budget happens it’s better than everyone worked themselves up over, still a tax rise, and that’s the difficult bridge to get over, but not as much as everyone thinks

This doesn’t decrease the tax take but would simplify the civil service benefits system and long term benefits on a smaller civil work force.

student would be a smaller loan and the mess and stress of U. Would be gone.

this is what the government should look at if they increasing tax

Would that be such a bad thing?

And once you take your lump sum out you can only add about £4k a year back in, it’s false economy unless you are actually retiring

But if you can’t attract or borrow big money for big investment why do you do?

investing in areas with decades of underinvestment- looking at future business growth- jobs for generations - green energy, data centres, robotics, pharmaceuticals

we need to keep the London stock exchange relevant - the EU is trying to convert Frankfurt probably or Paris - into the financial hub of Europe- if that happens we are all fucked - like truly fucked

people are going to have to adapt
it’s going to be painful for some, an opportunity for others

One thing i genuinely don't understand is how with all these tax rises combined with the cost of living is how anyone will have any disposable income and the economy will grow?

Our expenses have gone up massively recently as we have moved house so we've cut back and no longer have a cleaner, don't have my PT, I don't have any beauty treatments, we've stopped eating out etc and I save anything I have spare and the rest goes on bills.

This is no real hardship to me as these were luxuries, but if everyone stops spending as they can't afford it what happens to growth and people providing these services? Genuine question about the economics rather than the politics!

Growth depends on money coming into the country
exports
tourism
services - legal and financial
investment - energy - business

otherwise it’s the same pot of money swirling around decreasing in value as inflation rises

and the UK economy has been too reliant on “house prices” for far too long - many people have made huge sums on property for a while now - it’s unsustainable