ΒιΆΉΤΌΕΔ

People like me - people at 10% who will now pay at least Β£215 more per year.

People who run small - not large businesses - further stifling the ability to create a new business.

Thanks Gordon. And thanks ΒιΆΉΤΌΕΔ for failing to point this out.

Is it me or does for once Evan make absolutely no sense whatsoever? Was he having a bad morning or summat?

Does this mean that the people who were paying the 10p income tax band are now paying more income tax? Forgive me, I find budgets complicated.

A very clever readjustment of the finances. My only concern relates to how this change is reported. Headlines like "Brown cuts basic tax rate by 2p" are only technically correct as the chancellor has removed the original basic rate of 10p. As a result many who are caught in between the old 10p band and the new 20p one, will not necessarily feel the benefits that such headlines suggest.

This is not a good budget for the lower earner. They are going to pay Β£215 more per year and many are not entitled to tax credits. I think it speaks volumes that Brown has scrapped this.

The headline of a 2% cut in income tax is what the majority of people will first hear about in this budget. And at least Mr Brown seems to be balancing his budget on this one. However i'm somewhat concerned with how exactly this will effect the poorer individuals in this country. Bracket creep in income tax is always a problem and will this merely erode the hard work to encourage people at the bottom end to enter the labour market. Even with the tax breaks for entering the job market this may be in part a ploy to get people who otherwise would to exit the job market and make the unemployment figures look more favourable.

All of the commentators seem to have missed the fact that this new income tax regime will actually have a rather perverse outcome.
Using the allowances and tax bands of 2007-2008 for comparision anyone earning less than Β£18,605 will be worse off!

Obviously some of these people will be helped by higher Tax Credit but this really is quite bizarre for a Chancellor aiming to make work pay.

Are you sure? My numbers suggest all those earning less than Β£18,600 a year and who currently pay income tax will be paying more tax than present.

I must be wrong, we just work out that if your earn less than Β£18G a year, you'll losse money, and if you earn more you'll be better off.
So, like a tori, take from the poorer and give to the whealty. Please tell me we are wrong!

Aligning the top level of national insurance means a tax RISE OF Β£340m in 2008/09 by my calculation, hitting middle England. Back to good old income redistribution.

From recollection, the 10p starting rate of income tax was introduced by none other than Gordon Brown in his 1999 budget speech.

According to a quick google of the ΒιΆΉΤΌΕΔ Budget 99 coverage, Gordon Brown promised that "nearly two million people would have their income tax bill cut in half as a result of the 10p rate." Did this become too expensive then, or wasn't it a vote winner?

It would be fascinating to know how many of the credits/cuts/intiatives/wheezzes that Gordon Brown hasintroduced over the years have subsequently been abolished by him in a later budget... The ill-fated ΒιΆΉΤΌΕΔ Computing Initiative is another one that springs to mind (also introduced in the 1999 budget - was it a bad year for policy at HM Treasury?).

Could you explain that bit about NI a bit more?...

I got the same number!!!!

From recollection, the 10p starting rate of income tax was introduced by none other than Gordon Brown in his 1999 budget speech.

According to a quick google of the ΒιΆΉΤΌΕΔ Budget 99 coverage, Gordon Brown promised that "nearly two million people would have their income tax bill cut in half as a result of the 10p rate." Did this become too expensive then, or wasn't it a vote winner?

It would be fascinating to know how many of the credits/cuts/intiatives/wheezzes that Gordon Brown hasintroduced over the years have subsequently been abolished by him in a later budget... The ill-fated ΒιΆΉΤΌΕΔ Computing Initiative is another one that springs to mind (also introduced in the 1999 budget - was it a bad year for policy at HM Treasury?).

I'm confused. Evan - you usually manage to explain things in a way that even I can understand but, this time, you've lost me!

I have a Diesel 2.0 Ltr car, will i have to pay the highest rate of Tax this year, my tax runs out on the 31st March 2007 what will be the price now for 6 mths.

I agree with Benjamin, my calculations indicate that unless you earn more than Β£18,125 you would be better off before
(based on the LR as the same as this year Β£0-Β£2150)

Seems to be robbing from the rich to pay the poor. If you earn Β£6.5K per year you'll pay Β£4.50 a week more.

I came up with a Β£19k break even point. Not a happy result in my book

I think I have to agree with Benjamin; it appears to me that the lower earning workers will be worse off and for those who earn over about Β£19k per annum will be better off! Please correct me if you see it differently.

Robin Hood in reverse! I am obviously in a parallel universe.

Who does Mr. Brown think he's
kidding ?
It's like giving a child an
ice-cream but then stopping his
or her pocket money for the next
week !

If there's going to be a change
of Chancelor, it will all change
anyway.

Could you publish a graph of gross pay against one axis and how much you'll be paying less/more along the other axis.

That'll make it beautifully clear.

I agree with Benjamin, surely it lower
paid who's losing out. Can Evan Davis
or some explain it to us?

As far as I can see, the abolition of the 10% band and the reduction to 20% occurs from 2008/9, not from the coming tax year 2007/8. The personal allowances have not been announced - I would expect them to increase further so that the net effect for a low earner is either unchanged or reduced.

Taking figures from I concluded that for someone earning Β£18,000:

In 2006/7:
Β£215 @ 10%
Β£2,379.30 @ 22%
Total Β£2,594.30

In 2007/8:
Β£223 @ 10%
Β£2,319.90 @ 22%
Total Β£2,542.90

or a reduction in income tax of Β£51.40, nearly 2% of the tax amount (though only 0.28% of salary).

We can't calculate for 2008/9 yet because we don't have the information. According to the page I linked earlier, "[t]he Chancellor announces the rates of allowances at the Pre-Budget Report which precedes the start of the tax year to which they relate," so we'll find out in November what the net effect is.

Evan - how can you miss the obvious fact that because the 10% rate is abolished it is the worst off that lose out. Anybody earning less than Β£18000 will be worse off.

Unfortunately, the labour supporting media will present this as a tax-cutting budget with all the tax-raising measures hidden in the small print.

And did I miss the bit about stamp duty? Are they really not going to raise the Β£250,000 threshold. House prices are going up Gordon!

Awful, awful budget...

I am a pensoioner aged 81. I receive a married couples allowanceas I was born before 1935. The allowance is shown as Β£6365 on my PAYE coding but it is in fact only worth Β£635 as it has to be the same for all tax payers. If the 10% rate is abolished will it then be worth Β£6365. This makes all the difference to me being taken out of the tax liability?

On the higher rate tax threshold, there seems to be a difference between the Chancellor's speech and the background documentation.

The speech talked about higher rate tax being paid on income over Β£43,000 in 2008/9 compared to the current level of Β£38,000. Yet the background documentation only says that the higher rate threshold will increase by "Β£800 above indexation". Even allowing for two years of indexation at 2.5%, that only gets us to around Β£40,700. Which bit of misinformation should I not believe?

What about the NI earnings threshold ?
This effectively adds 10% of tax to earnings between Β£670 per week and Β£800 per week next year and to the 40% threshold the following year.

I think I will be worse off..... I am 34, have had to retire from work due to ill health so get a small pension, topped up by incapacity benefit. In my situation I can't claim any of the tax credits, which are supposed to make up for the increase in tax - so will be worse off.

I guess this budget is designed to discriminate against anyone who is either long term sick or disabled and unable to work.

Yet again Middle income earners hit the hardest.

I agree that this is very old labour, encouraging people not to work and to live off the taxes and national insurance of middle income earners.

I know people who refuse to work any more hours because they would lose Β£500 a month in tax credits. I, on the other hand, work hard to earn that Β£500 for my family.

Yet again, all spin and no real substance. Another increase in taxes.

People earning over Β£39,825 (personal allowance of Β£5,225 plus Β£34,600 starting point of 40% tax) are hardly Middle Britain! In fact it puts you in the top 10% of earners. The NI Upper Earnings Limit for 2007/8 will be Β£34,840 (I think - there may be some other threshold that needs adding on to this).

I believe it was stated that the new tax threshold/UEL will be Β£43,000. For someone earning this amount, they will currently be paying Β£1,270 tax plus Β£81.60 NI at 1% on the amount over the corresponding thresholds. In the new scheme they will pay Β£635 tax at 20% on this amount plus Β£897.60 NI at 11%. That's Β£1,351.60 versus Β£1,532.60, an increase of Β£181, and that's the worst case (for anyone earning Β£43,000 or over).

As a 62 year old living on state pension and 2 small occupational pensions supplememted by an equally small part-time job, I, for one, am certainly going to be poorer when these tax changes come into being. That's right, take from the poor and give to the rich..again!

I agree with Matt: could the ΒιΆΉΤΌΕΔ please publish a graph to illustrate the break-even point?

Evan says the abolition of the 10p rate is a sensible idea because it 'simplifies' the tax system. But surely this move is going to really hurt some of the very poorest people in the country.

A terrible budget and disappointing analysis.

This government says they are tough on crime and yet does nothing about fraud crimes which are costing us over Β£20bn. a year.

This government also says that they are making motorists pay extra to reduce fuel polution while in India virtually 80% cars run on LPG and this has drastically reduced this polution. Why is our government not keen on using same idea in Britain to make it greener rather than taxing motorists more?

Unless I'm missing something hidden deep within the budget content, it looks like charities are going to lose out big time. I am a Trustee of a small charity, and we gain a lot of income by getting people to sign Gift Aid declarations, so we can then claim back from the Inland Revenue the tax that people have paid on their donations to us - currently 28p for each Β£1 donated. When the basic tax rate reduces by 2%, then we're going to lose out. When this is added up for all the charities in the UK, we must be talking about a vast sum staying in the Government coffers, rather than helping charities. Or am I missing something?

Reducing tax to 20 p in the pound and abolishing the 10p low level will cost everyone earing more than 5405 per annum... why has no one made this clear in reports ...why the excitement of the lowest tax rate for 75 years...he certainly has fooled the reporters

I think this is a dreadful budget for the low paid or those reliant upon a small pension etc. They are the very people who need help to maintain a certain standard of living. This will hurt and I suspect many are Labour supporters who may well change their allegiance!

Evan Davis states that the "Better off" will be paying for the tax cuts.

Not so Evan. My wife's income of Β£8300 is from a company pension & state pension. She is 62 so won't benefit from the increased tax allowances for 3 years. Next April her tax bill will almost double. She doesn't work so will be unable to claim working tax credits to make up the difference.
Good for all pensioners? I think not.

Gordon Brown claims that Working Tax credit will offset the income tax increase, but this is simply not true for a large proportion of people - such as under 25's (like me), people without children (like me) and people earning over Β£12,000 (like me - though I think this figure is about Β£16,000 if both people are working and we are way over that!). I would say the Torie's estimate of there being 3.5 million families in the above category is about right.

Both PriceWaterhouseCoopers and ΒιΆΉΤΌΕΔ "expert" Hugh Pym are claiming that the interest tax offset will be offset by Working Tax Credit - this is simply NOT TRUE for people in the above categories.

I am under 65 and recieve pensions worth around 12k, I dont work nor claim any benefits, I reckon I am Β£131 worse off per annum with the demise of the 10%. However thank God for the info in post 11 as I live in middle Scotland

Im not sure why people are saying higher earners are worse if any one bothers to do the tax and NI calculations they would see that for someone earnming Β£40k, the fall in tax they pay at the 20% rate is greater than the increase in NI and loss on 10% now paid at 20%. Therefore someone on an income of Β£40k will pay less tax and NI.

Oh dear I think some one has been reading the free FT budget special and listening to their wrongful insight that higher earners will end up paying more tax and NI.

I work part time earn just over Β£9,000 am not entitled to any council tax or rent help has my husband has two small pensions (that he gets taxed on!) My husband is disabled we have one child who is over 18 still living at home and in higher education. I have caculated that on my earnings I will be Β£160.00 a year worse off.

Oh dear...what ever happened to socialism?

Can you believe that this Government has put out a budget that can disadvantage the fiscally disadvantaged so blatantly?

Shameful

My objections to it all are:

• -still no answer to annuity companies who give you no more interest than Government bonds yet take all your capital at the end
  
• - Brown wasting money on numerous failed projects
  
• - Taking billions from pension funds yet admitting problems with UK pensions
  
• - Robbing the lottery (tax on the poor) for Government projects
  
• - Taxing small businesses more than big businesses
  
• - Not being open about the amount of money borrowed by future generations due to PFI etc
  
• - Encouraging people to go broke to stave of possible recession during the last few years.
  

As a part-time worker and carer for my mum I was hoping for an incentive to work a few more hours when I can. I work a basic 8 hours @ Β£6.39/hour. If I work more than 4 hours overtime a month I begin to lose combined Housing and Council Tax benefit at 85p in the pound. In the budget I was hoping Gordon Brown would consider the earnings disregard set at Β£5 since 1988.

from Hansard in 1995:-

"In November 1975 the figure was Β£4. It was not up-rated to Β£5 until 1988. If the figure of Β£4 had remained, and had simply been inflation proofed, it would now be worth Β£16 a week. The Β£5 figure of November 1988 would now be worth between Β£7 and Β£8 a week. Both figures are a more realistic contribution to the additional cost of being in work"

I would be interested to know what Β£4 in 1975 is worth now.

I remember Gordon Brown's budget broadcast to the nation in 1997 well. The tax on pension funds was the biggest single tax raising measure in the budget. He sat in the garden of No 11 Downing Street, adopted that sickly smile he does so well, and completely failed to mention anything to the nation regarding pension taxation. This was manipulative and dishonest in my view, and gave a real insight into the character of the man.

Every budget, more tinkering with an already complicated tax system.
This one seems to affect the lower paid - a big mistake when it comes to election time - we do remember Gordon how you have affected our pension funds ( but probably not yours)and your apparent clever juggling with numbers in each budget.What is alarming is how many changes are apparently lost in your "small print" of your budgets.
I feel that with your considerable abilities you deserve a better job,but hopefully not as our next Prime Minister !

Every budget, more tinkering with an already complicated tax system.
This one seems to affect the lower paid - a big mistake when it comes to election time - we do remember Gordon how you have affected our pension funds ( but probably not yours)and your apparent clever juggling with numbers in each budget.What is alarming is how many changes are apparently lost in your "small print" of your budgets.
I feel that with your considerable abilities you deserve a better job,but hopefully not as our next Prime Minister !

Please forgive me but under this government all taxes have risen, preventing business growth, even the police service has been turned into a tax collection service and for what? our medical system is rubbish (i have just been to france and see what theres is like), our scools are rubbish (A, levels and dgrees are meaningless), our transport system is rubbish and our national identity has been destroyed. How much is Iraq and Afghanistan costing, when a loon like Mugabee roams free?
basically the problem with this country is: corruption at the most senior levels, a total disregard for efficiency and a no idea of the term fair play. the only soultion i am afraid is a totalitarian state.