Can someone please explain to me this whole 10p tax issue? Thanks?

Question

Can someone please explain to me this whole 10p tax issue? Thanks?

Answer 1

the first part of your salary is not taxed at all.  this is decided by your tax code, multiplied by 10.  eg 400L = 4000 pounds a year with no tax taken off

the next couple of thousand used to be taxed at 10% but now it is 20%

the rest, up to about 30,000 was taxed at 22%, this is coming down to 20%

the 10% change is bad for poorly-paid people because the extra tax we all have to pay, around 12 pounds a month, means more to them.  (Labour was supposed to be the government of the working class.)

Answer 2

up until april of this year, people paid 10% tax on the first £2,230 of their taxable income, then 22% on £2,230 - 34,600  then 40% on anything over £34,600

in April of 2008, Gordon Brown got rid of the 10% rate, and lowered the 22% to 20%

this meant that although many people were better off because of the 2% decrease in the range up to 34,600, anyone working full time (40 hrs per week) earning minimum wage was worse off.

in 2007/2008 they would have a tax free allowance of 5,225

so they would pay 10% of the next £2,230 (223)

then 22% of the remaining £4193 (922.46)

paying total tax for the year of £1145.46

with the abolition of the 10p rate, the same person this year would be paying £1242.60 in taxes, even though  the personal allowances increased in April.

what Gordon Brown has done to try and resolve this issue is to increase the tax free personal allowance by £600 for the year (to be implemented in September, then backdated to April).  this means tha overall, the minimum wage worker's tax will decrease by about £30 for the year, rather than increasing.

Answer 3

ok, so last year you would pay no tax on the first £5200 of income you earned (that's your personal allowance). Then you would pay 10% tax on the next £2200, and then 22% after that (until the 40% tax rate kicks in later on)

Now the 10% rates been abolished and a new 20% rate kicks in straight after your personal allowance. This is controversial as it hits the lowest earners the hardest as their income used to mainly fall into that tax bracket.

Answer 4

Heres how it works. Every year you are allowed to earn around £5500 tax free. The next £2000 you earn you pay 10% tax on in (10p in the pound). After that any more money you earn you pay 22% tax on it ( and 40% tax, I believe on anything over £35000)

Labour introduced the 10% tax bracket but now they have removed it which means that you now pay 22% straight away instead of the 10% first then 22%.

eg - with the 10% tax bracket

You earn £20000 per year - £5000 tax free

                                                 £2000 10% tax

                                                 £13000 22% tax

With 10% tax bracket removed

You earn £20000 per year - £5000 tax free

                                                ÃƒÂ‚£15000 22% tax

Hope this explains the issue for you

Answer 5

I believe that it is where people have to 10% of thier income extra to the government.

It is 10p to every £1.

Gordon Brown introduced it into the law, but then he backed out and un-introduced it.

It sent people mad and now they want to vote conservative.

Snow Man