Income Tax bands

[Dinglebert]

Originally Posted by 123

Very true, as with everything, some win, some lose.

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Also the rates in Scotland are lower for lower earners.

[Twin mummy]

Originally Posted by 123

I'm always shocked by these two statistics:

The top 1% of earners in the UK now account for more than a third of income tax paid to the government, following changes over the past decade that have left almost half the population exempt from making payments.

In research underlining the dual nature of Britain’s income tax structure, the Institute for Fiscal Studies said above-inflation increases in the personal allowance to £12,500 a year meant 42% of adults paid no income tax.

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Does that mean that 42% of adults earn less than £12,500 a year?

[Tinkerbell 1]

Originally Posted by WhereIBelong

Those 42% do not earn enough to have to pay income tax, but pay plenty of VAT so would not say they pay nothing.

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The post refers to income tax, hence me saying they paying nothing. They no doubt pay others taxes but that isn’t what the post referred to.

[123]

Originally Posted by Twin mummy

Does that mean that 42% of adults earn less than £12,500 a year?

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That is what it means.

When you consider about 40% of 18-21 year olds don't earn enough as students.

The vast majority of OAP don't earn enough

Many two income families have one person earning and the other in part time work that doesn't quite reach the personal allowance

When you look at it, it becomes surprising that 58% do pay income tax

[Twin mummy]

Originally Posted by 400ixl

The taxation system is often not an even playing field when you look past the individual income.

A household could have an income of say £70,000. But the tax bill could be very different depending on where the earnings come from. If there are two adults for example:

1 household where 1 adult earns £70k, the other does not earn so there is higher tax levels to pay (£20,756 in tax and NI)

1 household where 2 adults both earn £35k so there is only lower tax to pay (£15,116 in tax and NI)

The former household would also be taxed on child benefit should they claim as well, whereas the later would not.

There are other considerations that can swing things the other way, in that should the income for the household have disposable income the higher payer could get a greater tax relief on a pension payment.

Its a minefield and can mean that households earning the same can have very different incomes just based on the taxation system.

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If one is earning £70,000 they wouldn't be eligible for any child benefit whereas 2 in the same household earning £35,000 each would be able to claim full child benefit. I know technically you can claim and pay back but it would equate to paying back all of the child benefit.

That was similar to the position we found ourselves in when I was a stay at home Mum, and at the time I couldn't transfer my personal tax allowance to my Husband- think that has now changed as long as the earner isn't a higher rate tax payer.

[Twin mummy]

Originally Posted by 123

That is what it means.

When you consider about 40% of 18-21 year olds don't earn enough as students.

The vast majority of OAP don't earn enough

Many two income families have one person earning and the other in part time work that doesn't quite reach the personal allowance

When you look at it, it becomes surprising that 58% do pay income tax

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Yes, I thought it must include students and OAP's plus many part time workers and Stay at home parents, that doesn't sound as shocking as 48% of adults!

[123]

Originally Posted by Twin mummy

If one is earning £70,000 they wouldn't be eligible for any child benefit whereas 2 in the same household earning £35,000 each would be able to claim full child benefit. I know technically you can claim and pay back but it would equate to paying back all of the child benefit.

That was similar to the position we found ourselves in when I was a stay at home Mum, and at the time I couldn't transfer my personal tax allowance to my Husband- think that has now changed as long as the earner isn't a higher rate tax payer.

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You can now transfer up to £1250 of your personal allowance to your partner in the following circumstances

1) You earn less than £12,500
2) Partner earns less than £50,000 (£43,430 in Scotland)

Which means they can earn £14,000 before paying tax (a benefit of £250)

[400ixl]

Originally Posted by 123

You can now transfer up to £1250 of your personal allowance to your partner in the following circumstances

1) You earn less than £12,500
2) Partner earns less than £50,000 (£43,430 in Scotland)

Which means they can earn £14,000 before paying tax (a benefit of £250)

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I didn't include this as you can only earn £50k for this to apply, where the example is greater than this. It's just another example of the unbalanced system against single income families.

[Perthite]

Originally Posted by Pumpkin Pie

There are two sides to the coin though. Free university education, Prescriptions, no road tolls etc.

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Whilst that is true, we had all of those things before we became the most heavily taxed people in the UK - I’m not sure what we actually get for the extra tax we pay!

[Guest]

Originally Posted by Perthite

Whilst that is true, we had all of those things before we became the most heavily taxed people in the UK - I’m not sure what we actually get for the extra tax we pay!

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Free personal care for adults needing care and support? That's quite a draw for me. It's not cheap sadly.