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Tax Threshold 2011/12 - How Will The Changes Affect Me?

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<html> <head> <title>Tax Threshold 2011/12 - How Will The Changes Affect Me?</title> </head> <body> <h1>Tax Threshold 2011/12 - How Will The Changes Affect Me?</h1> <div class="info">Author: <a href="http://www.goinglegal.com/author_1_583780.html">BenW2811</a></div><div class="body">The Government have announced changes to the way your income is taxed. At the moment (2010-11), there is a personal allowance of £6,475 that can’t be taxed. The basic rate is for all incomes between £0 and £37,400 and is taxed at 20%. tax The higher rate is for incomes between £37,401 and £150,000. Since 2010-11, there has also been an additional rate for any income over £150,000 and is charged at 50%. The changes that will take place on 1st April will see the personal allowance raised to £7,475, bringing around 500,000 people out of income tax altogether. The basic rate will be for incomes between £0 and £35,000 (a lowering of £2,400) and will still be taxed at 20%. The higher rate will be for incomes between £35,001 and £150,000 (The lower end of this has reduced by £2,400; the higher cut-off point has remained the same) and will still be taxed at 40%. The additional rate stays the same, for all incomes over £150,000 and will be levied at 50%. To see how this could affect you, take a look at the calculations below. There is one for Person A earning £20,000 per annum, showing how the changes will affect him, and another example for Person B, who is on £200,000 per annum. Note: These calculations are only for income tax, and do not include National Insurance Contributions. Person A Person A is an employee of an SME, and earns £20,000 net per annum. 2010-11 £20,000 - £6,475 (Personal Allowance) = £13,525. This will be taxed at 20%, so £2,705 tax will be paid on this income. This leaves Person A with £17,295 for the year after tax. 2011-12 £20,000 - £7,475 (Personal Allowance) = £12,525. This will be taxed at 20%, so £2,505 tax will be paid on this income. This leaves Person A with £17,495 for the year after tax. As you can see, this person benefits from the changes, paying £200 less tax for the year. Person B Person B is a CEO of a national bank. He earns £200,000 net per annum. 2010-11 £200,000 - £6,475 (Personal Allowance) = £193,525 £37,400 will be taxed at basic rate of 20% = £7,480 £112,600 (£150,000 - £37,400) will be taxed at the higher rate of 40% = £45,040 £43,525 (193,525 - £150,000) will be taxed at the additional rate of 50% = £21,762.50 So, in 2010-11, Person B paid £74,282.50 in tax, leaving him with £125,717.50 for the year. 2011-12 £200,000 - £7,475 (Personal Allowance) = £192,525 £35,000 will be taxed at the basic rate of 20% = £7,000 £115,000 (£150,000 - £35,000) will be taxed at the higher rate of 40% = £46,000 £42,525 (£192,525 - £150,000) will be taxed at the additional rate of 50% = £21,262.50 So, in 2011-12, Person B will pay £74,262.50 per annum in tax, leaving him with £125,737.50 for the year. As you can see, this person also benefits from the changes, even if only by £20 per year. So it looks like the Government are trying to help poorer families more than they are trying to help richer people; by increasing the personal allowance, 500,000 people have been taken out of the tax system. And by lowering the basic rate’s top cut off point, they are starting to tax the ‘middle-class’ population more. As you can see by the examples above, the individual earning less per year benefits from the change more than a rich individual would. What are your thoughts on this? Has the Government made the right changes, or not?</div> <div class="source">Article Source: <a href="http://www.goinglegal.com/tax-threshold-201112--how-will-the-changes-affect-me-2306262.html">http://www.goinglegal.com/tax-threshold-201112--how-will-the-changes-affect-me-2306262.html</a></div> <div class="author"> <div class="authorBio"></div> </author> </body> </html>

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Tax Threshold 2011/12 - How Will The Changes Affect Me? Author: BenW2811 The Government have announced changes to the way your income is taxed. At the moment (2010-11), there is a personal allowance of £6,475 that can’t be taxed. The basic rate is for all incomes between £0 and £37,400 and is taxed at 20%. tax The higher rate is for incomes between £37,401 and £150,000. Since 2010-11, there has also been an additional rate for any income over £150,000 and is charged at 50%. The changes that will take place on 1st April will see the personal allowance raised to £7,475, bringing around 500,000 people out of income tax altogether. The basic rate will be for incomes between £0 and £35,000 (a lowering of £2,400) and will still be taxed at 20%. The higher rate will be for incomes between £35,001 and £150,000 (The lower end of this has reduced by £2,400; the higher cut-off point has remained the same) and will still be taxed at 40%. The additional rate stays the same, for all incomes over £150,000 and will be levied at 50%. To see how this could affect you, take a look at the calculations below. There is one for Person A earning £20,000 per annum, showing how the changes will affect him, and another example for Person B, who is on £200,000 per annum. Note: These calculations are only for income tax, and do not include National Insurance Contributions. Person A Person A is an employee of an SME, and earns £20,000 net per annum. 2010-11 £20,000 - £6,475 (Personal Allowance) = £13,525. This will be taxed at 20%, so £2,705 tax will be paid on this income. This leaves Person A with £17,295 for the year after tax. 2011-12 £20,000 - £7,475 (Personal Allowance) = £12,525. This will be taxed at 20%, so £2,505 tax will be paid on this income. This leaves Person A with £17,495 for the year after tax. As you can see, this person benefits from the changes, paying £200 less tax for the year. Person B Person B is a CEO of a national bank. He earns £200,000 net per annum. 2010-11 £200,000 - £6,475 (Personal Allowance) = £193,525 £37,400 will be taxed at basic rate of 20% = £7,480 £112,600 (£150,000 - £37,400) will be taxed at the higher rate of 40% = £45,040 £43,525 (193,525 - £150,000) will be taxed at the additional rate of 50% = £21,762.50 So, in 2010-11, Person B paid £74,282.50 in tax, leaving him with £125,717.50 for the year. 2011-12 £200,000 - £7,475 (Personal Allowance) = £192,525 £35,000 will be taxed at the basic rate of 20% = £7,000 £115,000 (£150,000 - £35,000) will be taxed at the higher rate of 40% = £46,000 £42,525 (£192,525 - £150,000) will be taxed at the additional rate of 50% = £21,262.50 So, in 2011-12, Person B will pay £74,262.50 per annum in tax, leaving him with £125,737.50 for the year. As you can see, this person also benefits from the changes, even if only by £20 per year. So it looks like the Government are trying to help poorer families more than they are trying to help richer people; by increasing the personal allowance, 500,000 people have been taken out of the tax system. And by lowering the basic rate’s top cut off point, they are starting to tax the ‘middle-class’ population more. As you can see by the examples above, the individual earning less per year benefits from the change more than a rich individual would. What are your thoughts on this? Has the Government made the right changes, or not? Article Source: http://www.goinglegal.com/tax-threshold-201112--how-will-the-changes-affect-me-2306262.html About the Author:

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Tax Threshold 2011/12 - How Will The Changes Affect Me?

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