New UK Government Tax Cut, Annual Tax Free Allowance to Rise to £10,000
Politics / Taxes May 11, 2010 - 05:44 PM GMTThe New Conservative / Lib-Dem coalition UK government is expected to cut UK taxes for most tax payers by £705 per year as part of coalition deal. The Lib-Dem Tax cut policy to be phased in over x years will take the form of the annual tax free allowance rising from £6,470 to £10,000 which is aimed at lifting the low paid totally out of income tax, however it will at the same time benefit all tax payers.
The £17 billion tax cut to be phased in will be financed by a series of separate tax rises that will hit the higher paid who will finance the tax cut, details of which will be announced in the emergency budget within 50 days.
Effect of the Lib Dem Tax Cut.
Gross Earnings | Current Income Tax Tax | New Income Tax | Better Off by |
£10,000 |
£705 |
£0 |
+£705 |
£15,000 |
£1,705 |
£1,000 |
+£705 |
£20,000 |
£2,705 |
£2,000 |
+£705 |
£25,000 |
£3,705 |
£3,000 |
+£705 |
£30,000 |
£4,705 |
£4,000 |
+£705 |
£50,000 |
£9,930 |
£8,520 |
+£1,410 |
- The above excludes NI tax which is expected to rise, i.e. average basic rate tax payers will thus see little overall change.
- Excludes higher rate tax rises still to be announced.
- Excludes inpact of stealth tax rises such as VAT.
- Implementation is pending details of how the tax cut will be phased in, i.e. over how many years.
Once the exact details of all tax proposals have been announced in the emergency budget within 50 days, then it will become clear how far the overall tax burden for those earning more than about £15,000 per year will rise, and significantly so for the higher paid.
Source: http://www.marketoracle.co.uk/Article19406.html
By Nadeem Walayat
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