Inflation and pay rises

[funkflex55]

I got the figure from the news and that is the gold standard for facts as you all know.

Any yes, stop quibbling over 0.2 0.4 or whatever. Whilst we all argue over these pence the knob heads offering and endorsing these deals go unopposed.

[stevejm]

If you think us getting a 4.2% payrise this year is an inflation matching payrise then you are misled.

We would need to get a 6.2% payrise to match inflation.

Everyone is paying income tax at 20% and N.I at 12% so a 32% deduction. Do the maths .

6.2% less 32% (of the 6.2) is 4.2% rounded down.

In effect, after tax and NI is subtracted from the 4.2% we are left with 2.9% in the pocket. And what's in the pocket is what we have to buy goods and services that have increased 4.2%. That's a 1.3% difference.

Its been that way for decades - which is why everyone has a lot less purchasing power and why 2 people need to work now to make ends meet rather than the just one person as it predominantly was 50/60 years ago.

[Sean06]

We pay 8% ni not 12%

[BELIAL]

We pay 8% ni not 12%

Never had it so good

[Sean06]

We pay 8% ni not 12%

Never had it so good

Would you rather pay 12% just keeping the poster right.personally never had it so good be even better if the shite deal is voted in

[stevejm]

We pay 8% ni not 12%

adjust my figures accordingly then - not much difference and my point remains the same.

[RobertT]

If you think us getting a 4.2% payrise this year is an inflation matching payrise then you are misled.

We would need to get a 6.2% payrise to match inflation.

Everyone is paying income tax at 20% and N.I at 12% so a 32% deduction. Do the maths .

6.2% less 32% (of the 6.2) is 4.2% rounded down.

In effect, after tax and NI is subtracted from the 4.2% we are left with 2.9% in the pocket. And what's in the pocket is what we have to buy goods and services that have increased 4.2%. That's a 1.3% difference.

Its been that way for decades - which is why everyone has a lot less purchasing power and why 2 people need to work now to make ends meet rather than the just one person as it predominantly was 50/60 years ago.

There's nothing new about pay rises being based on gross pay – in my experience that's always been the case.

But the one thing that's meant a pay increase doesn't go as far these days is the freezing of the Personal Tax Allowance at £12,570.
According to the figures here, the PTA would now be nearly £3,000 higher at £15,550 had it kept pace with CPI.

At a current combined tax rate of 28% that would mean an extra £2,160 in everyone's pockets each year instead of the taxman's!


*NIC's reduce to 2% on weekly earnings over £967.

[loyalsnail]

We pay 8% ni not 12%

adjust my figures accordingly then - not much difference and my point remains the same.

Your point isn't valid, whichever figure you use for NI, unless you'd never previously paid tax or NI and would pay both on the uprated salary (either in part or in full).

£100 x 68% (traditional 20% tax and 12% NI) = £68.00

£104.20 (gross pay increased 4.2%) x 68% = £70.856

70.856 / 68.00 = 1.042 (a 4.2% increase in take home pay)