Archive for the ‘Tax’ Category
By Philip - Monday, June 16th, 2008
The tax free allowance on termination for employees has been stuck at £30k for as long as I can remember. There has been no annual upgrading of this allowance as there has been for, say, redundancy payments or unfair dismissal compensation. This means that the concept of fiscal drag applies as inflation degardes the value of £30k year on year.
What prompts this post is a little clause in this years Finance Bill (section 49 to be precise) which amends section 291 of the 2003 Income Tax Act to ensure that the Mayor of London and Members of the GLA receive a tax free payment when they are relieved of their offices by a (no doubt) grateful electorate.
Is there any reason why Ken Livingstone should be paid his £69k tax free, when lesser (or greater) mortals would pay £15,600 tax on the same redundancy payment.
If you look at it logically, MPs and Mayors have greater job security than the majority of the population, the majority of the population are a notice period away from unemployment (say 12 weeks), MPs are a parliamentary term away from unemployment (say 5 years) or a lifetime (if they happen to occupy a safe seat).
Surely those who govern us don’t have one rule for them and another for us? I’ll have to dig out my old copy of Animal Farm to remind myself that equality means one thing for the governors and another for the governed.
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By Liam - Friday, April 11th, 2008
As reported here, the basic rate of income tax was cut by 2% (from 22% to 20%) last Sunday. The starting rate for income tax also disappeared last Sunday so no pay is taxed at 10% any more. This will cost most employees £223.00 per year as £2,230 of their pay will be taxed at 20% instead of 10%.
As well as tweaking income tax, national insurance had a bit of “fine tunning” too. This took the form of the upper earnings limit increasing by £100.00. This means that employees pay national insurance at 11% on £100 more of their income per week than they did this time last week. That means an employee earning £40,400.00 per year (or more) will pay £10.00 more national insurance per week (yes, £10.00 more not £11.00 because employees still pay 1% national insurance above the upper earnings limit). That’s £520.00 more per year!
So, an employee on £40,400.00 per year has saved £654.70 in income tax (2% of £40,400.00 less starting rate allowance of £2,230.00 less personal allowance of £5,435) but pays £223.00 more in income tax because of the abolition of the starting rate and pays £520.00 more national insurance. So, an employee on a salary of £40,400.00 is now £88.30 worse off following the “tax cut”! This ignores fiscal drag on the personal allowance too!
Employer’s national insurance has not changed significantly as the upper earnings limit is irrelevant to employer’s national insurance (which remains at 12.8%) - employers pay national insurance on all earnings above £105.00 per week and do not benefit from a reduced rate on higher tiers of pay.
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By Philip - Wednesday, July 25th, 2007
Remember the Beatles and Taxman
(if you drive a car, car;) - I’ll tax the street;
(if you try to sit, sit;) - I’ll tax your seat;
(if you get too cold, cold;) - I’ll tax the heat;
(if you take a walk, walk;) - I’ll tax your feet.
Well following a long legal case ending up in the House of Lords, we do not need to add an extra line to the song,
(if your spouse draws dividends from a Limited Company)-I’ll tax that as your income
Yes I know it’s not quite up there as a lyric with John and Paul’s but thankfully the extra line in the lyric will not be necessary as the House of Lords has ruled that wives who draw dividends from a Limited Company should have those dividends taxed as their own income rather than their husband’s, where both spouses own the share capital of the limited company. Quite right too! Read about it here.
Posted in Income Tax, Miscellaneous, Tax | 1 comment »
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