Brown's Announcement - £600

Brown's Announcement - £600

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Hi

Has anyone seen anymore of Mr Brown's announcement regarding the £600 personal allowance increase?

The announcement on the Revenues website seems to be incorrect as it states that the basic rate limit will be reduced by £1200 from £36000 to £34800, so higher rate taxpayers will see no difference.

Lets do the maths based on this then and the increase in PA - yes higher rate taxpayers are worse off so it must be a mistake surely?

And what about national insurance? Does this stay the same as it is - meaning class 1 & class 4 starts ealier than the tax does. If so watch for those minimum director salaries next year as you may be paying national insurance!!
Tom Ryan

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By neiltonks
16th May 2008 07:36

Strange but correct
It looks odd at first sight, but it's right.

Maths:

Employee on 543L code earns 55,435.

Current values:

Taxable = 55435 - 5435 = 50,000

Tax = 36000 @ 20% = 7200, plus 14000 @ 40% = 5600

Total tax = 7200 + 5600 = 12,800.

September values:

Tax code increases to 603.

Taxable = 55435 - 6035 = 49,400

Tax = 34800 @ 20% = 6960 plus 14,600 @ 40% = 5840

Total tax = 6960 + 5840 = 12,800.

So the high rate taxpayer pays the same tax overall using either method.

Neil.

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By Dave Paveley
16th May 2008 07:29

Yes..

..in the News section here.

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