Does anyone know the detail on the £10,000 tax free allowance

[fembear]

Does anyone know the detail on the proposed £10,000 tax free allowance? Everyone is saying that taking the lowest-paid out of taxation is a good thing but what is happening about NI? Will they raise the LEL too, which means that some may not get their stamp for the year, or will they keep the LEL low and raise the ET to £10,000?

No idea, but very interested to know the answer, so jumping on your thread.

I don't think NI is affected, but it's still a good thing!

The Tories campaigned against both the increase in the employee and employer NI contributions.

The employer NI increase will not go ahead, but the employee NI increase now will, to pay for increasing the lower tax threshold instead.

Shouldn't make much difference either way to most people, at least in the first couple of years - though pensioners will win because they pay income tax.

I think the OP was asking if the lower earnings limit or earnings threshold would be going up to £10000 to match the personal allowance. I don't think any changes are planned there are they? Just the 1% rise for those earning over £20k.

I know the details on this.
The full 10k allowance won't happen straight away. We will get a rise in the personal allowance at the emergency budget in June and then the "aim" will be for 10k.
To pay for this the Labour plans for NI (extra 1 per cent) will stand for employees. Gov will move the thresholds at which NI starts at 12 per cent and where it moves to 2 per cent to make it cheaper for employers.
So no the new personal allowance will be for income tax only and not national insurance.

I know the details on this.
The full 10k allowance won't happen straight away. We will get a rise in the personal allowance at the emergency budget in June and then the "aim" will be for 10k.
To pay for this the Labour plans for NI (extra 1 per cent) will stand for employees. Gov will move the thresholds at which NI starts at 12 per cent and where it moves to 2 per cent to make it cheaper for employers.
So no the new personal allowance will be for income tax only and not national insurance.

In the last budget didn't high earners lose their tax free allowance completely?

Don't know if it had already come into effect but does the Lib/Con proposal mean that those high earners will get their tax free allowance back and also be included in getting the gradual increase to £10k tax free allowance?

I was thinking about this feeding DS at 3am last night (sad I know) and the allowance is being talked about as £750 a month. If this is right, it is equivalant to me and DH getting another income into the family. And considering the defict we keep being told about, and the media chatter about VAT being raised to pay it off - is it really sensible? Just seems like a huge tax cut when huge spending cuts are also being talked about.

Don't get me wrong though, would love the extra money! Just hope its affordable for the country.

£750 a month?

You'll save the tax on the difference between your tax allowance and £10,000, so it's not a huge amount of money, but it will make a big difference to a lot of people.

(will someone work out the maths for me, I'm rubbish at this sort of thing)

I'll believe it when I see it.

MintHumbug - I didn't realise the increase in NI was still going ahead.

Mint, I'll believe it when I see it.

There's no way it could be £750 a month. Is personal allowance £6,400 now? If it is then the difference would be 20% of 3600 which is £720 over a year for a person, so £60 a month.

Am also not sure whether everyone is going to benefit from this or only people up to certain incomes. Taking into account possible decreased child tax credit and increased national insurance I don't think there is going to be a big amount of change.

Ah, okay I get it now. And with the likely VAT increase, threats to means test Child benefit and remove free nursery places, me on just over an average income having less money each month seems a lot more realsitic!

The amount you can earn a month before tax will be 830 pounds under the 10k a year regime, maybe that is where the 750 a month has come from, ie. you don't get that much more, you just earn that before you start to pay tax.

Is that right?

I am currently a SAHM, but the 10k threshold will be luverly for me, as from next year, fingers crossed, I want to get back into some work and my target is to try and bring in between 10 and 15 k a year, most if not all of which will not be subject to tax!!!! but yes, suspect will lose out elsewhere, but at least any pay packet I get will feel REAL.

just need to find the job first! but this gives me an extra impetus to think it will actually be worth my while.

means test CB? really?

I think fembear's question is over whether this potentially takes low earners out of NI completely - i.e. will the limit that triggers NI be the same as the tax allowance? If you don't pay NI there are lots of downside, such as no entitlement to sick pay or JSA I think.

It's an interesting question - does anyone know the answer (maybe this new govt haven't worked it out yet!)

This won't all be finalised until there is an approved budget that gets passed by House Of Commons. Proposal is to take the lowest earners out of tax and maybe they'll be a shake up of tax credits too - so overall the benefit may not be as much as expected.

The beauracracy of tax credits is more cost and its more efficient to reduce amount of tax at source and more of an incentive - thats what Conservatioves are about giving people opportunity to get away from state benefits.

'Proposal is to take the lowest earners out of tax and maybe they'll be a shake up of tax credits too - so overall the benefit may not be as much as expected.'

But if they increase VAT and NI, depending on how much, the net effect on the working poor is debatable and could be negative on many.

But that won't surprise me, either.

No wonder so many stay on complete welfare as long as they can! I can't say I blame them one bit.

It's not for us, but sometimes, when DH gets up at 4AM in winter to go slog away, it makes you wonder, especially because we'll never own a place or be able to save for a pension and people on the dole get their NI paid as well.