Budget 2007

[ewx]

[Poll #951035]

My back-of-the-envelope calculation suggests that the break-even point is around £18,600: you win by about 2p on every pound you earn above that, and lose below it.

There are benefits changes at the bottom end which presumably ameliorate the doubling of 10% rate to some extent (e.g. working tax credit) but I'm afraid I don't know how those benefits work, so if you're affected by those you'll have to work it out yourself.

Comments

[beingjdc.livejournal.com]

I'm about £25 a month better off from it - the benefit changes at the bottom are one thing, there's also fun and games with where the limits actually start, and they're rising faster for pensioners.

[oldbloke.livejournal.com]

If your BoE calc is right, I'm better off. Was glad to see the top rate threshold go up, another couple of annual increments would have seen me past where it was before.

[naath.livejournal.com]

If you're right I win by about 60 pounds a year.

I like the ISA raise, I assume that applies from this April?

And the Inheritance tax threshold is a long overdue rise given real estate prices. Although I'm not generally in favour of inheritance, so I'm not sure I like that much.

Selling off student debt was rumoured, but I can't see if it is true...

[aardvark179.livejournal.com]

Top rate tax payer, I'm definitely better off.

[aldabra]

I haven't looked at the benefit changes, although Child Benefit is going up by a couple of pounds a week by 2010.

I still think Brown is a good thing, though. But he could usefully do something about the marginal effective tax rate of working tax credit withdrawal, which is a much bigger zog than a pound here or there. Not that I'd be remotely afloat at all without tax credits; abolishing them would be precisely the wrong thing to do.

[vyvyan.livejournal.com]

My tax is doubled. Lovely.

[hairyears.livejournal.com]

Something's shifted on NI thresholds; I lose a third of what I 'gain' in lowered income tax.

Overall, it's neither high enough nor low enough to affect my vote: a couple of hundred pounds is neither here nor there.

So what would change my mind? This budget has no effect in removing perverse incentives at the bottom end of the labour market: it may well be that the most positive result of Gordon Brown's move next door will be the promise of a new Chancellor without the petty vindictiveness, and the irrational loathing of Frank Field that has distorted all attempts at a co-ordinated reform of taxation and welfare. We still need to eliminate 'traps' and the absurdly high confiscation rates for people attempting a transition from low incomes (especially with housing benefit) to a moderate wage.

I would vote Conservative - or even Communist, BNP or Lib-Dem - if there was talk of rolling back the ACT credit botch that has permanently damaged everybody's lifetime finances through it's pernicious (and little-publicised) effect on life and pension funds. Taking the Big Picture, Gordon may have delivered macroeconomic stability but he has also implemented regulatory uncertainty and unnecessary compexity; another Nigel Lawson will be needed, taking a machete to the 365-page monster that is this years' Finance bill and reducing it to something that delivers 'Simple, Compulsory and Low' taxation.

Or even 'simple, compulsory and higher' taxation: buried in all that complexity, I suspect that there are many subtle and damaging distortions, far worse than ACT or even the uncertainty over settled trusts that marked out Gordon Brown as the ill-advised administrative ninny that he really is.

Maybe I should blog this under my own banner. It'll distort the debate on your blog

[crazyscot.livejournal.com]

My envelope agrees with yours - £18605 using the 2007-08 figures and assuming standard personal allowance.

[truecatachresis.livejournal.com]

The band changes don't come in until next year, but as of next month, there are working tax credits that benefit anyone earning up to £16,400 - by more than they will be losing out come the changes next year. My very rough BOE calculation came out at £15675 as break-even, which made the tax credit thing make even more sense, but this doesn't include NI. (Not sure where £18,600 comes from - I make it a change in 10% on the £2090, which equates to £10450 for the reduction of 2% to kick in - add £10450 to the allowance of £5225, and you get £15675. I've probably missed something obvious, though.)

[emperor]

A little better off, not a lot.

[tienelle.livejournal.com]

As a filthy postgrad, I don't pay income tax. If I did, I'd have lost out.

[kjaneway.livejournal.com]

As a contractor, with my own limited company, I'm more than screwed by the changes in small company corporation tax.

You missed 'I don't get it'

[ex-lark-asc.livejournal.com]

Cavegirl no understand. What's a starter rate when it comes to income tax?

[pseudomonas.livejournal.com]

My intention is to be a student on a tax-exempt stipend for quite a while following the introduction of this, so I'm unlikely to be affected by this. If they move towards cutting income taxes and raising other taxes (say fuel duty) I'd be in rather more trouble, (although not as much as pensioners would be).