Higher tax rate to hit 750,000 more people

[Niceguy2]

www.bbc.co.uk/news/business-12321524

750,000 more higher earners people paying 40% tax whilst 500,000 low paid won't now pay any income tax at all.

I know....those flipping Tories only care about the rich!

Those who will be paying more are hardly rich!

Meaning it is now any family with an income over £35,000 not over £37,400 that loses child benefit.

MumInBeds, no, any family with 1 person earning 35k! A family with two persons earning 34k each will keep it!

How ridiculous!

i never understand this - i thought HRT was approx £42k per annum - not £37k (or soon to be £35k).

Does the £42k figure include the tax free allowance and so you have to earn £35k OVER the tax free allowance in order to pay HRT??

anyone know?

It's £35k on top of your personal allowance (which is about £7k) - so you'd need to be earning around £42k to pay HRT.

Yes, it includes the tax free allowance. However, when the new £10k tax free allowance comes in and takes very low earners out of paying tax all together, it will not apply universally to people paying 40% tax - it will be on a sliding scale.

I worked out recently that if I halved my gross pay I would only be 1/4-1/3 worse off in terms of take-home after CB was added back. Would personally like to see a single income-tax rate applied to everyone... it would be much fairer.

Yup, agreed. A single income tax rate is much fairer along with a high tax free allowance so the poor are not affected.

Unfortunately that will never happen because:

1. Politics of envy
2. The govt don't want ppl to realise quite what proportion of tax they pay.

If you previously were not paying the higher tax rate, and now you are, then you'll only be paying it on the top £2,000 of your income at most.

It's not much. That £2,000 was previously taxed at 20%, now it'll be taxed at 40%. So you lose £400 a year.

Earning £42k doesn't make you rich, but I don't earn that much and I would still give up £400 a year to make it so that people earning under £10,000 don't pay any income tax.

DH currently not higher rate tax payer. But will be when new levels come in. And so from 2013 we will lose CB which in our case is about £1,700 (two children).

On the other hand I earn about a thousand over the personal allowance and so as that increases, I will pay less tax.

But overall would be better if DH and I earned more altogether, but under £42k each. I did write to my MP about it and he did reply.

Pretty sure our tax credit is going from April but that is a pretty small amount (although still useful).

I do have the problem of paying too much National Insurance due to irregular work (I earn a lot when I do, but infrequently. And although the tax all evens out, you can't get back overpaid NI. This annoys me).

I do think people should be allowed to pool their personal allowance/tax etc to share it out evenly. Maybe only people who were married/in a civil partnership though, or else the paperwork would be unbearable and it would be very difficult to extricate yourselves.

Nicola - it might be worth you taking some advice. It's possible that by upping, or starting pension contributions, your DH could stay out of the HRT bracket and thus you could keep your CB.

I agree Trillian.

In France they have the civil partnership (like for same sex couples in the UK, but can be applied to mixed couples in France) where you get special tax status - they look at your combined income rather than having it assessed on an individual basis. It would be fairer - but, with PAYE - it could be a nightmare. For e.g. DP and I work at different organisations - so either they would have to share payroll data or we would have to opt out of PAYE and do our own tax returns.

Thanks Bramshott - we might think about that. DH does make pension contruibutions but increasing them is a possibility.

The CB is here until 2013 (is that right?) so we don't need to do anything straight away. And maybe by then we will both earn more anyway

Yes, the changes are from Jan 2013.