The Salary Calculator

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.

Tags: 20% VAT, April 2011, budget, coalition budget, Economy, election, emergency budget, HMRC, income tax, June 2010 budget, national insurance, Pay As You Earn, personal allowance, tax rates, The Salary Calculator, VAT