George Osborne's Autumn Statement - your reactions please!

[CatherineHMumsnet]

The Chancellor George Osborne will begin making his Autumn Statement in Parliament today at 12.30. Thought we should start up a thread so Mumsnetters can comment as it happens.

There are a lot of polarised views on this thread. The rich are hit most as they have been generally throughout the recession with much higher taxation, huge stamp duty costs which have all but killed the upper end of the market, the massive assault on their pensions and many more people being pulled into the 42% upper tax/NI bracket. The unemployed are having a rise in benefits, albeit low when most of those in work have not had any rises for years.

I agree with beta that it is a missed chance for all kinds of simplications of the complex system which works so badly. As someone said above we spend 650bn a year and we are borrowing about 150bn of that. We are in a huge mess and spending far too much even now.

sorry if being thick.

c4 news tonight said extra 400,000 in 40%tax bracket?

why?

has upping the lower rate income tax effect those at top?
Is 40k still the threshold?

78

"There are a lot of polarised views on this thread. The rich are hit most as they have been generally throughout the recession"

They haven't been.

Even in recession the rich get richer: Savers have been hit for £70bn as printing money 'helps rich' admits Bank of England

Independent analysis suggested that each of the richest 2.5million households in the country has enjoyed a windfall of anywhere between £100,000 and £300,000 since QE was launched in March 2009.

www.dailymail.co.uk/news/article-2192822/Even-recession-rich-richer-Savers-hit-70bn-printing-money-helps-rich-admits-Bank-England.html

---

What recession?: How Britain's billionaires just keep getting richer despite economic downturn

Billionaires in Britain are getting even richer.

Their wealth has shot up 18 per cent in a year.

While the rest of us worry about our jobs and battle to pay bills, the UK's 1000 richest people are now worth £395.8billion, according to the 2011 Sunday Times Rich List.

They have continued to recover from the economic crisis, which wiped £155billion from their wealth in 2009. Last year's total was £333.5billion, a record 30 per cent increase.

www.dailyrecord.co.uk/news/uk-world-news/what-recession-how-britains-billionaires-1102537

with much higher taxation, huge stamp duty costs which have all but killed the upper end of the market, the massive assault on their pensions and many more people being pulled into the 42% upper tax/NI bracket.

The poor have suffered disproportionately. Whilst the upper-middle class worry about the loss of their house prices, the poor and middle-classes worry about having enough money to pay for food and bills, sometimes having to make a choice between either.

The unemployed are having a rise in benefits, albeit low when most of those in work have not had any rises for years.

The 'rise' in benefits is below inflation. It's a real-term cut. This 'rise' is for the remaining benefits which still, as we speak, survive. Meanwhile, the Tories are doing everything they can to remove as many people off benefits as they can, even when it means killing disabled people.

I agree with beta that it is a missed chance for all kinds of simplications of the complex system which works so badly. As someone said above we spend 650bn a year and we are borrowing about 150bn of that. We are in a huge mess and spending far too much even now.

We are spending far too much 'even now' because the austerity measures have increased the deficit. This is because Osborne is wrecking the economy and prolonging and exacerbating the recession caused by the financial crisis.

It depends I guess what is classed as rich.

There were different views on the thread - those pressing for lower flat taxes (yes wonderful we need it) and tax simplification and those going on about the effect on the less well off.

Yes, 400,000 will move into the 40% (really 42% when you add NI on) tax bracket. You add your personal allowance to the level so if the level is about £40,000 you add on your £9k or whatever it is and if you earn more than £49k you pay 42% on earnings over £49k. That is how it works. If the band went up with inflation then those people would not pay 42% on their upper earnings. Not increasing allowances much also affects those earning quite a bit more too as year on year more and more of their income is taxed at the 42% or 52% (and from April 47%) upper rates. In fact it is more than 52% as you loose all personal allowances at a certain income level so your effective tax rate is more like 60%.

"has upping the lower rate income tax effect those at top? Is 40k still the threshold?"

For the tax year 2013-14 the Personal Allowance will increase to £9,440 and the basic rate limit will be set at £32,010. (HMRC site link here)

That means higher rate tax starts to apply at £41,450. The corresponding numbers for 2012/13 are a personal allowance of £8,105 and a £34,370 basic rate limit. Higher rate tax begins at £42,475.

In cash terms it breaks down like this for various salary levels. (Ignoring NI)

• £100,000 p.a. = £29,884 tax in 2012/13. In 2013/14 = £29,822. £62 less
• £50,000 p.a. = £9,884 in tax 2012/13. In 2013/14 = £9,822. £62 less
• £30,000 p.a. = £4,379 tax in 2012/13. In 2013/14 = £4,112. £267 less
• £15,000 p.a. = £1,379 tax in 2012/13. in 2013/4 = £1,112. £267 less

So more people will be in the higher rate tax band but the total personal tax bill is going down.... the lower the income, the more you get to keep.

But I think anything we gain through the increase in the personal allowance threshold will be almost exactly taken away again through lower child tax credits.

Mind you I'd rather just hold onto it in the first place, as slightly simpler.
But still, it's all just tinkering.

Still £9,440 before they start taxing you is something I guess.

Cinnabar, did you get to the bottom of the tax charge on the £80k DB scheme? DH and I were wondering (not that it s

"Still £9,440 before they start taxing you is something I guess"

This year it is £8,105. 2011-12 tax year it was £7,475. 2010 - 11 tax year it was only £6,475. That's almost £3000 more of earnings each year kept in our pockets rather than given to the Treasury since 2010. Balls is on the radio right now saying things like 'people on lower incomes are paying more tax' and 'raising more taxes from people on middle incomes'. That's not just spin, that's a lie.

April 2013 9,205 per person. which is £18,410 a couple can earn before paying tax. I much prefer high personal allowances and fewer tax credits/housing benefit as it is purer and simpler. Silly for the state to give with one hand and then just take back. If you go back a few generations most people paid no tax ever.

Thanks cogit for explaining. hubbys 41k for some reason we thourght he was already paying 40%on anthing over 40k anyway and anything under basic rate.

Thank god the child benefit wasent set as low as initially suggested as with 3kids we be scrwed as lost tax credits.

so am I right in thinking middle earners be worse off.

I dont think increase in tax allowance will make huge diffrence to our lives but its something.

"so am I right in thinking middle earners be worse off."

Those with children and earning £41,450+ will be worse off eventually as any CB claimed is taken back through their tax-code and on a sliding scale. However, it's going to be a delayed effect because HMRC can't do anything until they start getting the first self-assessment forms back next summer.

Spoke to an accountant yesterday... if you get childcare vouchers from work and are about to go into higher earning bracket with a pay rise watch it. You might be worse off and should go ask the boss to freeze your pay. It's ludicrous but probably affects a lot of us. So cross I wrote a bit about it money.uk.msn.com/autumn-statement-2012/autumn-statement-2012-why-a-pay-rise-could-cost-you-money

I still maintain that the only thing likely to help is a much much more radical rethink.

A MASSIVE rise in tax ceilings, and at the same time take everyone who is in work of any kind off benefits, ALL benefits including housing benefit and child benefit, while raising benefits for those NOT in work in line with inflation. This should actually safeguard social security, as opposed to the current imbecilic plan to cut back and back on the worst-off.

Those on family tax credit should wind up NO worse off. Because people in work will keep more of their earnings, there will be a bigger incentive for people to get work. Small businesses - more than half UK workers are employed by them - will also be no worse off - better off, if NI ceilings are raised too. The short term pain will be a big reduction in civil servants. GOOD. And government will be much smaller.

FFS. Just do it, George. You are unelectable now - take a real risk, and stop poncing about.

I know most will not agree...

I agree up to a point with some of what sieglinde says. Completely slash the tax bill for lower earners. But I think the tax credits for part-time workers have to be completely rethought. People can't do more hours because there wouldn't be any point as they would lose money. This is a mad situation. All these extra benefits for working people are only encouraging companies to pay lower and lower wages. Whilst avoiding tax themselves. This shouldn't be allowed to continue.

And that's one of the main aims of the new Universal credit. To end the bizarre situation where people turn down work because it puts them in a worse position.

A good friend of mine recently was asked to do more hours at work. She works 3 days a week and gets quite a big chunk in tax credits. So she looked into what the effect was if she did an extra day. Basically it wasn't worth it. Maddening really.

Exactly, VivienneMary. And niceguy2. It has to stop because it's actually endangering the whole welfare system. But I'm not sure universal credit will do it UNLESS it comes WITH raising the tax threshold.

Glad somebody agrees with me. I've got a left wing friend who knows loads more about politics than I do. When I said lower tax thresholds for poorly paid people and cut down on te welfare she said oh these people feel they are contributing to society by paying tax. I think the welfare state should be cut right back. It has grown to ridiculous proportions. The welfare state is for people in need or who can't support themselves or who have lost their job. Not to prop up places like Tesco's and Starbucks so they can pay ever lower wages. Grrr. It all makes me so mad.

I think UC will do a better job but it wont be perfect. Inevitably some will find specific scenarios where certain people lose out and use that to argue the entire system is flawed whilst simultaneously ignoring the fact the current system is even more deeply flawed.

Like most chancellors George in in a world of his own. Any women on here who have dreams about Mr Osborne?. I am told it happens.

"And that's one of the main aims of the new Universal credit. To end the bizarre situation where people turn down work because it puts them in a worse position".

Of course the other option would be increasing minimum wage, improving public transport subsidies, and widening access to affordable housing, so that people can take work in the confidence that they can pay their rent, travel to work, and feed their children.

But it's much easier just to make sure that low benefit levels mean that people getting state support will always be the worst off in society, no matter how poorly paid workers are, and no matter how high the cost of living.

Yermina, I don't think those aims are incompatible. That is, the idea of raising the tax threshold in place of supplementary benefits would make low-paid workers much better off too.

Cutting benefits without doing that is the problem. Both low pay and the ridiculously inflated housing sector - a problem to which you allude - are being upheld by the existing benefits system. If housing benefits to the waged were abandoned, the market would fall, and overnight housing would become more affordable.

If some such move isn't made soon, there will be no benefits to speak of - they will just be ratcheted down and down as the UK's economic position worsens.

Well that's what my left wing friend said. Are you her. It's pie in the sky. Labour were in power for a good innings and the same problems have got worse. Widening access to affordable housing. What exactly does that mean? It's all very well coming up with these trite phrases but a different thing putting them into practice. That's why people lost faith in Labour. Because they haven't got the answers to this country's problems.

"Both low pay and the ridiculously inflated housing sector - a problem to which you allude - are being upheld by the existing benefits system"

The property market in the UK has made a lot of speculators and pensioners rich, and has fuelled the economy for years and years. High rents reflect high house prices generally. The only way to circumvent this is not to expect private landlords to rent their expensive properties out for vastly less than it costs to service the mortgage, but for the state to BUILD affordable rented housing. You know - like we did in the 1950's (and which the Tories then sold off in the 1980's).

"Widening access to affordable housing. What exactly does that mean?"

It means building council houses basically. And then renting them out, rather than selling them.

Pensioners won't be taking a hit for some time. Bear in mind that women my age started paying into ours and were promised it at aged 60 and now we won't get it until aged 67 or something ridiculous. That's around £50,000 in todays money stolen of of us. Same with male workers working longer before they get it.