Changes in UK Tax
Wed, 9 April, 2008 – 4:55 pm
This will affect both employed and self-employed people in the UK. For those of you who don't know how our tax system works it's usually the first £X (£5,435 for 2008/09) is freepay, this means you can earn that much and it's all yours. The next £Y (£2,230 for 2007/08) was taxed at 10% (tax bracket 1) and then the next amount up to £Z (£34,600 for 2008/09) charged at 22%. Plenty of people earn above that but this change will be good for them and so I won't go any further on the figures. So basically you had free pay, then 10% tax, then 22% tax. However for this 2008-2009 tax year it's all changed. The free pay is still there (£5,435) however the lowest tax bracket has gone completely. The second tax bracket is now the first, and it's dropped from 22% to 20%.
What does this mean? Well it means that if you earn less than around £19,000 you will be paying more tax. So steal from the poor to subsidise the rich basically (don't get me wrong, I don't begrudge people earning more, but this idea has done just that). More than 50% of the working population in the UK earns less than £19,000, a large percentage being on the minimum wage which will net you around £11,000 a year at 40 hours a week. To earn £19,000 at 40 hours a week you need to be working at just over £9 per hour.
For me, well I'll be paying more tax, just. I've not quite hit the £19k mark yet, although have been very close for the past 3 years. Being self employed and building a business from nothing, I'm quite happy at that, plus I wouldn't want it any other way (working for a corporate firm I mean, I wouldn't mind a bit more money – I'm not that daft!). I just feel sorry for those who do earn the minimum wage. Whilst in amounts it may not sound like much extra (£223 max extra per person, reduces the more you earn), for someone who earns just £7,665 they're now paying double the tax. Not to forget, if you're employed you also pay 11% National Insurance, or 8% if you're self employed (plus that whole £106 ish a year Class 2's).
So, time to ask for a pay rise, or put your charges up!
I hate tax! keep gettings letters telling me I still owe them money for year ending 2008, meh Ill have to wait till I can afford to pay it! the interest isn't too bad.
By Adam Dempsey on Thu, 10 April, 2008
Thanks for explaining this. I'd heard about it through the BBC news site but didn't have chance to sit down and properly read it. Now I've read it here, I know for a fact that both Karl and I will be affected by this.
As if the price of petrol, food, electricity, gas, council tax and god knows what else going up hadn't already screwed us from here to Sunday and back, here we are being walloped from extra tax.
I've decided I'm just going to give up my job, go on the dole and pop out a few brats.. at least then I'll get the cushy life.
By Jem on Thu, 10 April, 2008
I know the feeling Adam. My biggest one off payment was £5k+ which was a major blow to the account. Luckily I'm down to 6 months payments now so it's not so bad now.
Glad to have helped Jem, sorry to be the bearer of bad news! Being on the dole is going to sound ever more appealing to some I'm sure. If someone's on the lower end of the wage market then this could just be the push they need, afterall you get your dole money, rent paid, council tax paid, prescriptions paid for, dental etc. The only thing that would put me off is having to go into the dole office and sign on once a fortnight!
By Sarah on Thu, 10 April, 2008
Ah, but you don't even have to do that. Make like you've got a bad back and can't move for a few minutes without being in agony and you get written off for life. High rate DLA, a mobility car and whatever, rates paid for you etc and all you've got to do is go to the bank to take the money out.
It's pride that stops me. While I could quite easily sit on my butt all day surfing the 'net and doing some sneaky web dev. from home, I wouldn't be able to live with myself knowing I was conning hard-working tax payers out of money I didn't need.
Still, the system is pretty screwed up.
By Jem on Thu, 10 April, 2008
Good point Jem. Our system is pretty screwed really, no wonder so many people take advantage of it when there are plenty of people with real concerns who don't benefit like they should.
Ahh well, there's always the lottery
By Sarah on Thu, 10 April, 2008
It's not just the tax system that's screwed our whole politcal system is crap. We the public sooooo get a bad deal.
Before any laws,guidelines, decisions are made they should go on "am I smarter than a 10 year old", our country would eventually be a better place to live
I had a big rant about Alex Salmond(waste of space, cough) a couple weeks back about a decision he made. It is unfortunate that the country is ran by a bunch of monkeys….
By Si Philp on Fri, 11 April, 2008
Oooh, if we're bitching about what's wrong with the UK then I could a while!
My personal opinion is that the root of most of the problems we face in the UK starts in the home.
Mr Justice Coleridge understands that the government are way off target with their efforts to address current and future issues.
By Will on Sun, 13 April, 2008
Hang on… I just wrote about the changes in the tax as some people wouldn't have heard about it yet and others wouldn't necessarily realise how much it could affect them!
Don't be getting into politics on my blog! None of that allowed around here!
By Sarah on Sun, 13 April, 2008
Heh! Along with SEO and religion, politics is probably another topic of conversation that I should avoid on blogs.
Now, have you seen the price of petrol recently…
By Will on Sun, 13 April, 2008
Haha, tell me about it! I can't remember when I last filled up, the needle hasn't moved off full thankfully. I got a shock when I last saw the price. 103.9p/litre!!
By Sarah on Sun, 13 April, 2008
Tax in britain is horrific. Hopefully the change in goverment will help us out!
By Anon on Fri, 9 May, 2008
I can't see the government backing down on the 10p tax, despite the opinion polls, and there's no change in government, just the Mayor and local councils, unfortunately. Still, if they want to stay where they are then they're going to have to do something radical to win back their voters!
Blimey, here I am talking politics and I hate politics!
By Sarah on Fri, 9 May, 2008
Could anyone tell me what my situation would be, regarding payment of taxes on earnings if I am a UK National working in the US as a teacher for 2 years? Must I pay tax to one, both, or either?
Thanks,
holman
By holman on Tue, 16 September, 2008
You'd probably pay US taxes and you wouldn't pay anything to the UK as you'd have no earnings here. However your best option would be to call the Inland Revenue and see what they say.
By Sarah on Fri, 19 September, 2008
Thank you, Sarah.
h
By holman on Sat, 20 September, 2008