Whoo-hoo, I thought, when I heard someone say he's sliced 2p off income tax today.
Then I learned it doesn't take effect until next April
Then I learned he's financed the cut by scrapping the 10p tax band (on the first £2150 of taxable income). We will actually be worse off after this 'cut' !!!
How so ?
Well, if you're a married postie on £311/week i.e. earning £16,172 pa, then at the moment your personal tax allowance (the bit they so graciously allow you to not pay any tax on) is £6065. You then get taxed at the 10p rate on the next £2150 of income, i.e. Gordon grabs £215 of those earnings. Then you pay the 22p rate on the remaining £7957, another £1750.54 for GB, for a total tax take of £1965.54
BUT, from April 2008 you'll pay the 20p rate on ALL of your taxable earnings, which are 16172 minus 6285 (the married persons allowance for 2007/2008). So that's 20% of 9887, which amounts to £1977.40
THAT'S ACTUALLY AN INCREASE OF £11.86 PER YEAR
unless he or the next chancellor raises the personal tax allowance by some £593, in which case, we'll be no worse off
But there's little chance of that, as the threshold is only rising by £220 this April
And the CWU gives money to Labour
