The Salary Calculator

Emergency Budget Update

by Admin

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 allowance increased to £9,940, over 75 allowance increased to £10,090. Threshold of 40% tax lowered to £35,000 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.

Edit (5th January 2011): The values above have been updated with the latest information from the Treasury and the April 2011 calculations have been updated in line with these. The Salary Calculator will be updated again with final values in early Spring 2011, following the budget update.

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

18 Comments to Emergency Budget Update

1. 

   hi thought tax free was going upto £10k
kaylea on June 24th, 2010
2. 

   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:

   The Government is committed to increasing support for lower and middle income earners and improving the rewards to work, and has a long term objective to raise the personal allowance to £10,000 with real terms progress towards that goal every year.

   Which means that they are intending to reach the £10k limit eventually, just not right away.
admin on June 26th, 2010
3. 

   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.
Ian on August 12th, 2010
4. 

   The 10% tax free allowance should occur by April 2012
Sarah on September 6th, 2010
5. 

   This is ridiculous, taking more money from the rich who spend in the first place will just discourage them to stay in this country. In the short term it may be good but sooner or later the UK will be poorer than ever especially since travel and communication between countries have become much better.

   Well i hope all the best since more and more financial institutions are thinking of leaving the UK and it will just hurt us.
Tim on September 27th, 2010
6. 

   Interesting, in an effort to stimulate the economy and encourage spending, the goverment is taxing those who spend the most. I see the logic there!
Gordon Quinn on November 2nd, 2010
7. 

   The UK is just a joke, I buy all my booze in France even after I pay for the petrol and cheap day return I save loads I refuse to pay the high tax on drink. With the rise in tax I will be spending even more than before overseas. The minimum wage is one of the lowest in Northern Europe. I think low level earners should not have to pay any incomme tax to make up for the low wages. The cuts need to be made at the top. Why should the tax payer pay for our corupt leaders to have a nice life.
Jan on December 14th, 2010
8. 

   Jan……your kind didn’t seem to mind when Bliar and Brown were ruining the country, they were/are FAR more corrupt that the current lot.

   The state of the nation is 100% Liebours and it’s idiot supporters.
Paul on January 18th, 2011
9. 

   The whole situation is enough to drive you into the benefits system! You would think with a combined household income of 78K you would be ok but no!! I earn 60K, and have 3 children, and a extended family of 4 (7 in total). But in comes the CSA to rain more woe on my life!! How a non working parent can take home more than me without working is beyond me (although I also partly support my extended family) The system is very wrong and although I will continue to vote for the Tories this situation needs to be sorted out. The rich will always be rich even if you raise tax to 50% it would not worry them. But middle earners are always the ones who get the battle wounds!!
Andy on January 18th, 2011
10. 

    Does anyone know why am i taking home an extra £25 come April 2011 (after tax). I thought i’d be taking home less what with National Insurance increase and tax etc? Can anyone help?
John on January 31st, 2011
11. 

    These cuts have hit so hard. We have a good income of 46k combined (My partner earns £35k working 2 jobs, whilst i work part time and earn 11k). We work hard, with no breaks. We haven’t had a holiday in 6 years since our son was born. We share a (small) car, and don’t live a lavish lifestyle – and all of these cuts and increases are going to make it increasingly difficult for us!
    I agree with Andy, the rich will be rich regardless. And whilst we are not poor, we are by no means rich!
    With the cost of living in this country, our 46k income keeps is with our heads above water – the spongers I know of don’t work, live in bigger houses than us and enjoy foreign holidays!
    Cut out the spongers, control immigration, and we’ll all be better off.
Gem on February 1st, 2011
12. 

    @John – probably because the personal allowance is increasing by £1,000. This is the amount of income you don’t pay tax on, so it offsets some of the increased tax and national insurance.
admin on February 1st, 2011
13. 

    Gem, I totally agree with the Closing the border comment, If we were to cut health, housing & job seekers benefits to everyone coming into the UK to Zero, surely that would stem the flow of spongers coming in and create more jobs for the spongers already here?
Mark on February 10th, 2011
14. 

    Ref the message from admin 1st feb ref increase in wages, has this been confirmed, cause my payrol dept said they have not heard of any increases, they do like to not pay where they can and didnt want to ring HMRC or whoever to find out for sure, any advice would be great.

    Thanks
Edwin on February 22nd, 2011
15. 

    Hi Edwin,

    Details of the forthcoming tax rates and thresholds are available on the HMRC website here: http://www.hmrc.gov.uk/rates/it.htm (see the 2011-12 column in each table).

    To be clear, the reference above is to the increase in personal allowance (the first table) from £6,475 to £7,475 which means you start paying tax later – this isn’t a wage increase but rather an increase in tax-free income. You’ll notice in the second table that the threshold for 40% tax has been lowered so those already paying 40% tax will see less of a benefit from the change.

    This takes effect from the start of the new tax year – i.e. 6th April 2011, which may be why your payroll department have not yet made any changes.
admin on February 22nd, 2011
16. 

    Hi
    Paul i agree with you that labour let us down but so did tories before them we were in debt when they were in power before, i believe the whole of the governing bodies are corrupt and do not spare a thought for anyone in this country, as they do not live on the breadline along with the rest of us.
    All in all its going to be a miserable few years EVERYONE
kerry on February 24th, 2011
17. 

    Kerry, I think perhaps you should look at history. When Labour took over in 2007 there was a budget deficit of around 3% of GDP. It is well known that Labour followed Tory spending plans for their first term, and sure enough, at the end of that term they had reached a budget _surplus_ of around 1.5% of GDP. What is very telling is that within 1 term, Labour had completely reversed those fortunes and we were back to a 3% deficit. A swing of nearly 5% in 4 years. It’s incredible anybody could ever vote for Labour again. They literally spent, and spent, and spent and what have we gained from it? I mean really? What benefit have we seen for the incredible mess Labour’s financial mis-management has left us with for years to come.

    The answer of course is obvious. We have gained nothing. Because not only will all the mad minded schemes Labour introduced have to be cut, but so will some of the more essential services. And all to pay for Labour’s outrageous extravagance.

    For reference the deficit is currently running at around 11%(!!!!) of GDP. Now think for a moment… that 11% equates to you or I spending 11% more than we earn. And Labour have been doing this for years racking up debt with reckless abandon.

    We were hit with a global financial crisis and, had our spending been under control, we would have had plenty of cash in reserve to ride out the storm. But no, Labour had been spending like it was going out of fashion and so we are left in a pickle!
Mark on February 25th, 2011
18. 

    Paul wrote:

    “The state of the nation is 100% Liebours and it’s idiot supporters.”

    It’s a but rich you calling other people idiots when you can’t even use an apostrophe properly.
VV on March 12th, 2011

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