Income tax and Nat Ins.

[empip]

If Osborne merges national insurance and income tax, I guess that means another tax hike for the middle ground pensioners.
So 20% tax band becomes 32%.

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[JohnD]

I agree with your use of the word "guess"

let's assume ther worst, eh?

What do you consider is the taxable income of "middle ground pensioners" and, given their allowances, what do you think is the tax they pay on it?

 

[empip]

I agree with your use of the word "guess"

let's assume ther worst, eh?

What do you consider is the taxable income of "middle ground pensioners" and, given their allowances, what do you think is the tax they pay on it?

Not a bad guess...

Middle ground pensioner I'll say Male aged 65 with pension income attracting income tax at 20%. I'll propose, grossing somewhere between £9940 and £25000 per annum, not normally attracting NICs.

During his budget speech, Osborne did say he wasn't looking to extend Nat ins to pensioners or other forms of income, therefore I reckon a tax hike was a valid possibility, not altogether gone away either, consultation will take place he said.
His statement 39 secs into this. http://www.bbc.co.uk/news/uk-politics-12836274

Some other post budget remarks...

And Tony Bernstein, senior tax partner at HW Fisher and Company chartered accountants, said: "At the very least, this is an admission that National Insurance is a tax.

"...But in real life, merging National Insurance and income tax will be almost impossible to achieve in a simple fashion. Politically, will a much higher headline basic tax rate combining income tax and National Insurance contributions be palatable?"

Treasury committee chairman Andrew Tyrie said: "This has been a beguiling idea which successive chancellors have looked at very closely and then in the end rejected, largely because it hits the incomes of certain groups in unexpected ways.

"Maybe the time has come to implement it."...

Nat Ins fund is ring fenced, the Govn actually borrows from the fund from time to time. Rumour is they raided it to to finance the cost of developing the National Electricity Grid in the past. Actually a decent benefit to all.

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[JohnD]

I think you'll find your £25k p.a. is way above the income of a middle ground pensioner.

See if you can find a figure that says the average pensioner has an income exceeding £14,000 p.a. Most of them are considerably less.

The personal tax allowance will rise to £8,105 in April 2012 (unless your income exceeds £100,000 ), but as you know, older people get more generous allowances. At age 65-74 it is currently £9,940, and at age 75 and over it is £10,090 come April. This results in the majority of pensioners paying no income tax. The wealthier pensioner does not get these increased allowances.

The merger of NI and Income tax is not even a plan, it is something to be talked about.

You art of course enttled to reckon (=guess) whatever you want.

 

[empip]

"See if you can find a figure that says the average pensioner has an income exceeding £14,000 p.a. Most of them are considerably less."

I agree most surely are.
I actually chose the words 'middle ground' because the actual use of 'average' didn't seem appropriate and I was trying to differentiate between the higher and lower income brackets with an 'upper' guess of £25k, low as it turns out.

True false or skewed here is the average (your word) figure(s) asked for.
http://www.statistics.gov.uk/cci/nugget.asp?id=1274

...In 2008/09, pensioner couples received average income of £564 per week, compared with £304 per week for single men and £264 per week for single women. The largest source of income for pensioners is state ‘benefit income’, which includes state pension income and benefits. Occupational pensions are also a significant source of income, particularly for couples...

Tempered by

...In 2008/09, pensioner couples in the highest income quintile1 received median net income of £755 per week, compared with £197 per week for those in the lowest income quintile...
So the average in the lowest 20% is above the £9940 threshold.


"The merger of NI and Income tax is not even a plan, it is something to be talked about."

Red book Page 33
http://cdn.hm-treasury.gov.uk/2011budget_complete.pdf
Consultation on long-term plan to merge income tax and National Insurance.

1.77 The Government believes that integrating the operation of income tax and National
Insurance Contributions (NICs) can remove distortions, reduce burdens on business and improve
fairness. However, it recognises that any change will be complex and involve a wide range of
policy and implementation issues. The Government will consult this year on the options,
stages and timing of reform. It will maintain the contributory principle and will
reflect this in any changes it brings forward. In addition, the Government will not
extend NICs to individuals above State Pension Age or to other forms of income such
as pensions, savings and dividends.

"You art of course enttled to reckon (=guess) whatever you want." I never used the word 'reckon' it was a guess.

Yes, I am entitled to free speech within the rules and I would have been certain you would have agreed to that and not inferred that I was totally wrong.

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[JohnD]

I never used the word 'reckon' it was a guess.

I reckon a tax hike was a valid possibility

eh?

 

[empip]

oops ! Missed that.

But what about the rest ?

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[JohnD]

yes, although the average pensioner has an income of about £14k, the average male pensioner has an income of about £15,808

I still don't agree that the middle ground of pensioners includes those on £25k


To my mind "long-term consultation" means talking about it. A Plan has to have a destination and a route, and preferably also a timescale and a schedule of who has to do what to get there.

 

[big-all]

i think when it come to averages they should remove the top 10% and bottom 10% and the average would plummet

 

[empip]

They do quote, for couples, the highest quintile (20%) with median, NET income of £755 per week and the lowest quintile median NET of £197 per week
Median being the middle value of the set of take home values.
They say...
Notes:
Quintiles divide the data, ranked in ascending order, into five equal parts – from those with the lowest incomes in the bottom 20 per cent to those with the highest incomes in the top 20 per cent.

So I suppose that means if there are 10 million pensioners then 2 mil' are in the bottom 20% with the average of the 1,000,000th and the 1,000,001st NET incomes being the median for the group.

We shall see.

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[geraint]

They do quote, for couples, the highest quintile (20%) with median, NET income of £755 per week and the lowest quintile median NET of £197 per week
Median being the middle value of the set of take home values.
They say...
Notes:
Quintiles divide the data, ranked in ascending order, into five equal parts – from those with the lowest incomes in the bottom 20 per cent to those with the highest incomes in the top 20 per cent.

So I suppose that means if there are 10 million pensioners then 2 mil' are in the bottom 20% with the average of the 1,000,000th and the 1,000,001st NET incomes being the median for the group.

We shall see.

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quintile....

please explain...

 

[joinerjohn]

It's a bit like a pantile, but slightly different.. Do keep up dear chap. These OAP's do have roofs over their heads, don't you know. What ho and all that.

On a more serious note,,, Most non working OAP's have paid their due in National Insurance over the years. If at some point NI get's merged with taxation, where do you draw the line to say that certain OAP's should pay less in taxation, because of the amount of NI contributions they have made, in their lifetime?

 

[JohnD]

a quintile is a fifth

like a quartile is a fourth

 

[empip]

They do quote, for couples, the highest quintile (20%) with median, NET income of £755 per week and the lowest quintile median NET of £197 per week
Median being the middle value of the set of take home values.
They say...
Notes:
Quintiles divide the data, ranked in ascending order, into five equal parts – from those with the lowest incomes in the bottom 20 per cent to those with the highest incomes in the top 20 per cent.

So I suppose that means if there are 10 million pensioners then 2 mil' are in the bottom 20% with the average of the 1,000,000th and the 1,000,001st NET incomes being the median for the group.

We shall see.

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quintile....

please explain...

Please see above.

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[Nige F]

I never used the word 'reckon' it was a guess.

I reckon a tax hike was a valid possibility

eh?

Well according to my Ready Reckoner - I shouldn`t be a pensioner yet and yet I don`t seem to do much in the way of work . Carry on wageslaves