bye bye 10p tax rate

[beckyvicky]

I work with 2 secretaries, we all work part time ( I do the accounts). We all work P/T and do not earn v much and fall in the (now gone) 10p tax band. So on Tuesday I asked them both how they felt about losing their 10p tax band and going up to 20p. Neither of them knew about it, despite it being on BBC breakfast TV etc.
Now I know I'm a sad git who lives in a world of numbers,but I was absolutely flabbergasted that 2 women in their 30's/40's, with kids, husbands, jobs, general interest in life etc were oblivious to the fact that their tax bills just doubled overnight.
Do other people know....?
Am I just too sad?

He says he's giving it back, riven.

Through tax credits. Haahaa. That's like a crocodile giving you a loan of meat, especially working tax credit.

You think it's all going along swimmingly, after reading each one of your 202 award notices, it all checks out, even for years.

And then, you get a slim envelope through your door.

'I'd pay for it by charging higher earners more tax (but by reducing level at which 40% kicks in rather than increasing the rate). Oh and my own personal bugbear, making all inherited money taxable as if it was earnings.' Therefore Prufrock, you'd be hitting teachers and nurses even more, as you don't have to earn that much now for 40% to kick in!

Why tax inherited wealth? It has already had tax paid on it by those who earnt it. That's double taxation surely. IHT is 40% anyway, and any IHT has to be paid before probate can be granted. This is currently causing MIL a problem as her mum died recently, and the house will go for over the IHT threhold, so MIL will have to find £30k plus for IHT, and she's a pensioner!.

I haven't noticed there being any financial benefits to being a family under this government, and whilst it would be nice to have a family tax allowance so that SAHMs like me could use their tax code against their partners income, it would be a nightmare to administer, and make the tax system even more complicated than it already is.

The easy way is to raise the thresholds for income tax, so that the poorest are taken out of tax altogether, and the rest get to keep more of their money. The basis of the tax system is that it should be equitable, and your proposals aren't as they are against those who are not in families or who don't have kids, and that is not fair.

What's inequitable IMO is that a teacher earning £30k who is supporting himself, a SAH wife and 2 pre-schoolers should pay the same amount in tax as a single man. Or that a 40 year old childless nurse who is caring for her elderly parents in her non working time should pay the same tax as a 22 year old who is still living with her parents. Allowing every individual a tax allowance which they could offset against the wages of whoever is finacially supporting them would be far closer to the principle of "from each according to ability". And if families are benefiting from tax free earnings on childrens allowances you could scrap the whole WFTC system without financially penalising them.

And if I inherit money, I haven't paid tax on it before. All earnings are taxed multiple times. You earn money and your employer deducts income tax, you buy goods and VAT is taken, you pay a nanny/gardener/cleaner and they pay income tax themselves. I just don't fundamentaly agree with significant amounts of money being passed on through generations- I don't think it's good for the benificiaries and I think it's far better to deliver a redistributive tax system through taxing unearned income than taxing self-earned income. (I speak here as someone whose dh has just had put in trust for him a very significant amount of money)

I fully sympathise with the practical issues - I've jsut finished sorting out my grandmothers estate - she died 4 years ago. But if IHt was payable by the benificiary upon receipt of the money rather than by the estate you would remove the probate problems (If the only asset is the house btw your MIL is allowed to apply to pay the IHT only upon sale of the house - she should call the IHT helpline people- they are actually v. helpful)

But isn't it the point that people have choices? The single man could argue that he should pay less tax than the married one, as he isn't using the education system. Parents who put their kids through private school could then claim the same. The teacher on £30k (well not unless he's top of scale or through threshold) chose to have kids, that's how he wants to spend his money. Yes, transferable allowances would be great, that would reduce my dh's tax bill, as I am not in paid employment, but it has been examined and rejected so many times, it ain't going to happen.

I do agree with money being passed on to the next generation. We only have 1 child, and he will get the lot when we pop our clogs. As this will have come from our taxed income (used to pay the mortgage), I don't see why it has to be taxed again. It is not 'unearned' income either, it has been earned by someone, and they have chosen to pass it on. If you want to go down this road, then you take away freedom of choice over the individuals financial choices altogether, and there that doesn't work. Again, it's about my choice what to do with my money. My income (when I worked) was taxed, but only retaxed if I chose to buy items that attracted VAT. I think my cleaner is working on the black, but my Polish isn't good enough to find out.

I don't think that the tax system is a redistributive system however; the govt uses the tax to pay the bills, and the social security bill is only a part of that. People don't work so that their money can go whizzing off to someone else, they work for themselves and their families, and to improve matters for the next generation in their family. We are all selfish animals at heart, so up the personal allowances, bring in flat rate tax, and watch the tax take and the economy grow, as people will work harder if they can keep more.

Thanks for the IHT tip, the house is being sold for 6ook plus, at a conservative estimate, and there are three siblings who have to find 30k+ each in IHT. Ouch! However, the profit will pay for uni fees for architecture and modern languages for dhs 2 little (!)21 y.o cousins, and for my dfils cancer treatment/operation, so some good will come of it.