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Budget 2013: 22 pints better off
by Richard Watkins on Mar 20, 2013 at 15:10
Does the Budget make you better off?
I have been watching the gradual erosion of the basic rate income tax band over the years as I am sure many people have.
Chancellors give with one hand and take with the other.
The basic rate band in 2012/13 was £34,370, in 2013/14 will be £32,011 and in 2014/15 will be £31,865.
The personal income tax allowance has increased from £8,105 in 2012/13 and will reach £10,000 in 2014/15, as announced to-day. This is a rise of 23% over 3 tax years.
The basic rate band will reduce by about 7% over the same period.
So deducting one from the other are we 16% better off? Imagine that in 2013/14 you earn £41,450 (i.e the current personal allowance plus the basic rate band) and in 2014/15 you earn exactly the same amount.
The increase in the personal allowance gives an extra £560 of untaxed income which, in the previous year, would have attracted a tax charge of £112. But in 2014/15 the basic rate band has shrunk further but you pay less tax; £83 in fact.
This equates to 0.2% of your income or about 22 pints, after the 1p duty reduction that is. So you are better off.
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