Where Does It Go? – UK Money Blog £

September 2008 – What is all this talk about UK tax rebates, and does it affect you?

• 5 million low paid workers were losing out due to the abolition of the 10p tax rebate – this is roughly classed as all those who earn less than £17,000 a year.
• The rebate is the Government saying they got it wrong (after intense political pressure) and attempting to recompense, at the cost of around £2.7 billion to the country.
• The tax rebate will be given in your next pay-slip, or next year if you’re self employed when you declare your taxes.
• The rebate was done by changing how much taxable income you are tax free on – increasing from £600 to £6035.
• There are still losers – those earning £8-10,000 were to lose £200 a year from the new tax laws – the rebate should give back £120 so they will still be losing £80 compared to pre-budget.
• People earning from circa £17,000 to £40,835 gain from the rebate, as they were better off before anyway under the 10p tax rate abolition and now get the rebate on top.

Is this fair? What would you have done?

Resources:

Use a salary calculator to work out how much you will pay.

Aug 30th – 2008 Darling recently had a piece in the Guardian where he told us:

UK Chancellor Alistar Darling

“the economic downturn would be “profound and long-lasting”,
“…has insisted it is his duty to be straight with the
public, after telling a newspaper the UK faces its worst economic
crisis in 60 years.”
“…that voters were “pissed off” with Labour’s handling of the
economy, a key issue at the next election, and said it was “absolutely
imperative” that ministers communicated their intentions better.”

Basically, we’re fucked and going to have a recession.

And now the PR exercise starts trying to educate the masses that it is not Labours fault.
Watch the BBC interview where Darling repeats, 4 times, parrot fashion, the mantra’s the PR men have told him to say. To every question asked him his answer is:

• I’m being honest
• Every other country in the World
• Unique Circumstances
• Credit Crunch
• Rising Oil and Food Prices
• We helped Northern Rock
• Tax Rebate next month
• Helping People getting back into work
• Fundamental of Economy Sound

“Who’s going to win Eurovision this year?” “Honestly, every other country in the world has rising oil and food prices, I remember when we helped northern rock I was going to give a tax rebate next month…blah blah blah…I think they should bring back Cliff Richard.”

I do notice that not having a TV makes you more aware of the repetitious Squealer type announcements. Lets break it down a bit:

• I’m being honest – Why do I get jittery when a politician starts with that?
• every other country in the world - Asia seems to be unaffected thus far
• Credit Crunch – buzzword for people at the moment – basically free credit to everyone will eventually bite you on the arse
• Rising Fuel and Oil Prices - didn’t Mr Murdoch say it was morally correct to invade Iraq for a “$20 a barrel oil”?
• We Helped Northern Rock – Nationalising a bank under intense pressure after failing to find it a buyer, placing £1.3 billion more in national debt.
• Tax Rebate next month – What tax rebate? The one where companies can claim back VAT they shouldn’t of paid in the first place because they overpaid?
  Or the rebate to make up for the blunder of not noticing abolition of the 10p tax rate would put the lower paid workers out of pocket?

A new bill to factor into your expenses this year are the new car tax rules – if you’re buying a car first registered after 2001 then the car tax you pay is set to change, due next year.

If you buy a very fuel efficient car, you could pay no car tax, but a gas guzzler could cost you £455 a year.

A BBC information page gives you the typical tax for the leading cars being sold today, find it here.

You may need to bear this in mind if your selling a car from after 2001 also, since the car may have been instantly devalued, or you may be lucky to find it has increased in value, since buyers will factor in they will pay no car tax on a highly economical motorcar.

There has been some backlash from the press that this tax will affect the poorest more, and Gorden Brown also faces backbench rebellion due to it acting retrospectively, hitting drivers who had no knowledge of the tax when they bought their car.

Like many government initiatives at the moment, the measure seems to have good intentions (cutting CO2 levels) but hitting the wrong type of people in the pocket, which after all is the majority’s main concern.

Judging by the pressure on Gorden Brown recently, this measure could be taken down, but expect some kind of initiative targeting green cars soon.

Its been a real noticeable change in policy in the UK where environmental concerns take front stage – as a child in the 80s I remember such initiatives would have been part of the “loony left”.

Tags: cartax, budget tips, car

I keep meeting self employed people who haven’t heard of this scheme – which is a real shame as its brilliant. 

Basically the motive is to make it worthwhile for people to work – a lot of Tory propaganda in the 80s was aimed at the council estate single parent mum who had loads of kids to get benefits – it was more worthwhile to do that than to actually work. 

Tax Credits seek to correct that by making it more worthwhile to work – if you qualify you get a weekly or monthly payment to bump up your earnings.

If you work more than 30 hours (16 for parents) and earn less than roughly £15,000 – you qualify.

For self employed people this is even more attractive as the costs of the business as taken into account – only actual profit counts against the earnings.

My brother took on tax credits after many urgings from me when he was a musician in Cornwall – after arranging his NI contributions (£10 a month), he got in contact with tax credits – he sent in evidence of his work hours, a diary of jam practices and gigs, along with promotion posters, and recieved the tax credits within 6 weeks of roughly £45 a week.  Not enough to retire on sure, but worth enough to cover petrol getting around. 

One other thing to note is even if this year you are earning over the threshold, Tax credits works on the last tax year up to April – so if you earn £20,000 this year but only £6000 the year before – you may qualify.

Resources:

HM Revenue And Customs Info on Tax Credits

CAB Self Employment Checklist

Tags: taxcredits, budget tips, self employed