Millions Due A £60 Tax Rebate This September
A U-turn by the chancellor on plans to scrap the lowest 10 pence tax band will leave 22 million of us £60 better of this September after receiving pressure from backbench MPs to ease its impact.
The new measures will mean basic rate taxpayers see a tax saving of £120. They will have £60 less taken from their September pay packets and will then see their net pay rise by £10 per month for the rest of this tax year.
How the changes affect your pay and tax
If you pay tax at the basic rate of 20 per cent the changes take effect from the first pay day on or after 7 September and equate to a tax saving of approximately £120 over the course of the tax year. If your September pay day is on or after 7 September, you will pay up to £60 less tax that month. If you’re paid monthly and your September pay day was before 7 September, you will pay up to £70 less tax in October. How much your tax reduces will depend on how much you’ve paid already – and in some cases you might get a repayment as part of your pay.
After this if you’re paid monthly you will pay up to £10 a month less tax and if you’re paid weekly you will pay up to £2.30 less tax. (The actual figures will depend on your income.)
Critics of The Changes
Some critics of Chancellor Alistair Darling’s U-turn say that these tax rebates will also benefit middle-income earners as much as those on smaller incomes.
This will also punch an estimated £2.7bn hole in the country’s finances as Britain faces a deep economic downturn.
“When the chancellor put this budget together he wasn’t expecting to lose £2.7bn, but I’m sure when he re-jigged his numbers, he will take account of this extra money,” said Chris Jones of tax advisers Lexis Nexis.
However this may well be good news for the economy. Taxpayers with another £60 in their pocket may well go out and spend it which in turn will boost the High Streets.
this may way balance it [the cost of the rebate] out, but probably not to the full amount.
The 22 million people who are supposed to benefit from this change are the basic rate taxpayers who pay tax at a rate of 20% and whose incomes are below the threshold for paying the higher rate tax of 40%.
This is far more than the 5.3 million people originally estimated to have been paying more tax now that the 10p tax rate has been abolished.
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2 Responses to “Millions Due A £60 Tax Rebate This September”
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I am a pensioner who recieves a private pension of £650 a month with £97 per week OAP pension. Do I qualify for £60 tax rebate
Hi John Im not quite sure how this works out for people on a pension you could have a look on the tax website http://www.hmrc.gov.uk.
But your best bet would be to phone your local tax office for a quick answer