UK Tax Rebate in simple figures

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.

Working Tax Credits – Do It

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