The budget for 2007 was released on March 21st with a
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How will the budget
affect your tax rebate? |
surprise reduction of 2
pence on Income tax, at the end of what is likely to be Gordon Brown’s
last budget. The initial sweet taste will soon disappear when we factor
in the new amendments the chancellor has in store for us.
The government
has decided to scrap the starting rate of tax which currently stands
at 10% of your income between £5,035 and £7,385. In
Gordon Brown’s defense this is probably a positive change
as it simplifies the tax structure and the starting rate seems almost
a token offering.
The net effect of the
changes in income tax will be a negative one for anyone earning
below £17,000 but a positive one for anyone earning between
£17,000 and £40,000. Those earning over £43,000
will pay £20 a year more in tax.
The most common reason
for people being due a tax refund from HM Revenue & Customs
is that they have only worked part of a tax year, resulting in their
tax allowance and starting tax rate being calculated incorrectly.
As the new budget will abolish the starting rate of tax it will
reduce the number of people who are due a tax refund. We should
see this as a positive sign as it means we are more likely to be
paying the correct amount of tax and as a result not due a tax refund.
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