Further to my previous post on UK Tax Changes we've got another change. They're now increasing the free pay amount by £600 for the present year. This gives a £120 saving over the year compared to before the announcement yesterday.
What does this now mean? Well working on the figures (note I use the self employment figures but I'm sure they're similar), if you're earning between £6035 and roughly £10,500 you're still worse off, but if you're single then you can apply for Working Tax Credits to help boost your income a little and these are being increased more than normal this year. For couples then the threshold is roughly £16,000, for a single person it's around £12,500-13k. Your best option there is to check on the Inland Revenue site for Working Tax Credits.
With the change now in place, compared to our old system, I'll be about £150 better off, nothing major but it's better than being out of pocket.
I am totally bloody confused now. I can't keep up with all of this crap – the government should have just left things alone.
Edit: having read the speech on the BBC site I think I just about grasp it. I was £4 worse-off with the tax changes and this extra £120 makes me £116 better off overall. Hopefully. Oh well, better than a kick in the teeth!
That sounds about right. Basically before the change you'd have been getting £5435 freepay and then the rest was taxed at 20% (plus your NICs), and now you get £6035 freepay and then 20%.
So for someone on £20,000 it was £2913 tax and now it'll be £2793.
My £150 was on an £18k income (at self employed figures) compared to the old system of the 10% band, I was going to be £10 or so down but now I'm £150 up. Of course that's if I make £18k this year, who knows?!