2007/08 2006/07
- under 65 5,225 5,035
- 65 – 74 7,550 7,280
- 75 and over 7,690 7,420
Don't forget though that he is also increasing the upper earnings limit sp that it ties in with the income at which you hit 40% tax. This will see it move from £645 per week to £800 per week by 2009. So you will pay an extra 11% on that difference - if you are earning that much.
A lot of it was giving with one hand and taking with another e.g. basic rate tax down to 20% but then the abolition of the 10% rate. Apparently lower earners can claim back what they lose here via tax credits - but what's the point in taking it in the first place only to have to fill forms to get it back , to mention nothing of the cost of actually administering all this. I'll tell you why he does this - it's because he can't bear the thought of EVERYONE being able to take advantaqe of the 10% rate.
Not happy about the small companies corporation tax being increased from 19% to 22% over the next 3 years - big companies corp tax has gone down by the way. A lot of small companies struggle as it is so I can't see how increasing their tax burden is going to help.
Again - the reason he has done this is because he hates the thought of one man companies (like mine) paying some profits via dividends thereby avoiding NI. He has already tried to stop this via IR35 and has also now (in the budget) outlawed managed service companies (largely IT contractors working through the likes of Giant, taking dividends without being directors) - ammusingly this has lead to companies house being unable to cope with the number of new Ltd Company applications
Anyway - because there is no real way of stopping free-lance workers from setting up and working through their own Ltd Co's (paying dividends) he is now increasing the small companies rate so that he gets ultimately 22% of our company profits rather than the 19% he gets now. Thanks a lot Gordon - typical sledgehammer solution that will no doubt cause a lot of struggling small businesses to fail.
Of course he's not the only one who can rob Peter to pay Paul - I may well decrease my salary (pay myself a proper amount presently) which will see me pay less NI to offset the increase in Corp Tax
Matt.