PBR 2008: The AccountingWEB.co.uk community responds

Posted by AccountingWEB PM | on Mon, 24/11/2008 - 19:54 2481 2 comments

Darling’s hour-long Pre-Budget Report was heavy on forecast and history: the Chancellor didn’t announce his first policy until almost four o’clock. But what he did say has provoked a whole host of reactions from across the AccountingWeb community. Here’s a summary of how you scored his performance this afternoon:

-1 NIC increase makes hiring people more expensive
As Phil Rees points out, the increased employers’ National Insurance contributions will actually make hiring people more expensive.

Continued...

British income tax no longer makes any sense???

BryanS1958 | Mon, 24/11/2008 - 23:50 | Permalink

.....I hadn't realised that it made sense before!!!

Marginal rates

RebeccaBenneyworth | Mon, 24/11/2008 - 23:14 | Permalink

I'm sorry, I disagree. The marginal rate is surely 60%.

Each £2 of income above £100,000 will result in a reduction in personal allowances of £1. Thus for £1 extra income the reduction in personal allowance (and therefore additional taxable income) is 50p. so the marginal tax on £1 of income is 40% x £1 plus 40% x 50p = 60p. Plus of course 1.5% NIC.

So the tax rates run like this (from 2011) : 31.5% (basic rate plus NIC) ; 41.5% (higher rate plus residual NIC); 61.5% (at £100,000); 41.5% (from around £106,475 - depending on inflation rise in PA), 61.5% at £140,000; 41.5% at around £146,475), and finally 46.5% at £150,000.

For the self employed the only difference is that the basic rate is 28.5% not 31.5%.