Will you be better off?
From the budget report, I’ve attempted to knock up a simple tax graph showing you who will be worse off and who better off under Gordon Brown’s new plans. He’s announced a cut of 2p in the basic rate of tax effective next April, but he’s also abolishing the starting 10% rate of tax, with no concomitant increase in personal thresholds announced. Here’s the basic effect - the blue line is the new tax regime as if applied today, the purple line is the current regime:
There are some caveats: Brown is making working tax credits more generous, so they will continue to a higher level, helping people on the lowest incomes (that’s my attempted interpretation anyway); and the top NI threshold will be raised, increasing slightly the NI paid by the richest.
The upshot, though, as far as I can see, is that if you earn in the £7k-£18k band, you’ll pay more tax despite this headline tax cut. The biggest beneficiaries appear, from the graph, to be those earning around £36k a year.
This is all rather back of the envelope so corrections welcome…
Update: Ryan’s worked out that £18,605 is the salary figure when you switch from loss to gain.
Seems a bit unfair. I’ll be a few quid better off but someone earning half my salary will be worse off. I’d happily have it the other way round.
Comment by Neil — March 21, 2007 @ 3:20 pm
[...] it was of Labour to double the tax rate for low-earners yesterday (which I blogged about last year, including this telling quote from Gordon Brown), I completely failed to notice that it was this [...]
Pingback by Menky stat check (4) | No geek is an island — April 7, 2008 @ 11:11 pm
It seems that 12 months down the line, Labour MPs are cottoning on to what you and I realised way back in march 2007.
Comment by Simon — April 8, 2008 @ 1:09 pm