Emergency Budget Update
The new Chancellor of the Exchequer gave the coalition government’s first Budget today, within 50 days of the election as promised. There were a great many changes, most of which will take place from April 2011, so I have added a new row to The Salary Calculator to give an indication of what the impact might be.
Unfortunately, a lot of the figures won’t be confirmed until towards the end of this year, so I have had to make some estimates based on what was described in the Emergency Budget report. For those who want to know, details of the figures I’ve used are below. For those who don’t – you can go straight to the “April 2011″ row of the Salary Calculator for April 2011 values.
Another change announced in the Budget was an increase in standard VAT rate from 17.5% to 20% effective from 4th January 2011. The VAT Calculator has also been updated so you can see what a difference this will make to purchases.
The calculations for the April 2011 values in The Salary Calculator are based on the following assumptions. Under 65 personal allowance increased to £7,475, over 65 allowances not changed. Threshold of 40% tax lowered to £35,400 from £37,400. National Insurance rates increase from 11% to 12% for basic and 1% to 2% for additional, as set out by the previous government’s budget. National Insurance basic rate threshold increased to £7,475, additional rate lowered to £42,875. All other values unchanged.
Most of these values are just estimates – they will be adjusted in line with inflation and confirmed towards the end of 2010, when The Salary Calculator will be updated.
4 Comments to Emergency Budget Update
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hi thought tax free was going upto £10k
Hi Kaylea,
The Lib Dems said in their manifesto that they would increase the tax free allowance to £10k, but the coalition government’s new budget only includes an increase to £7,475. However, they did say:
Which means that they are intending to reach the £10k limit eventually, just not right away.
By the time the coalition reach the 10k tax free amount a labour government probably would have reached around a 9k tax free amount anyway.
If the proportional representation doesn’t go through later this year then the lib dems have little reason to stay in a coalition government. This means another election will be called. The lib dems won’t be able to win that election and whoever does win (labour or conservative) will then scrap the 10k allowance but keep all the other tax hikes that have just been announced that did not work in peoples favour (40% threshold and VAT etc). Essentially we are going to get shafted regardless. What I don’t understand is how the government are expecting the few young people who do have jobs to live of what they earn. They can’t live with mum and dad forever. Aren’t we suppose to pay for pensions and stuff, I don’t live with mum and dad and I earn 15K after tax and essential bills there is simply nothing left for things like pensions, I don’t even drink alcohol because it’s too expensive to get drunk. Something’s going to happen soon that’s going to push people to far and then they will just snap.
The 10% tax free allowance should occur by April 2012