Wednesday, 21 March 2012

How much is the tax cut worth?

How do you assess the rise in Personal Allowance to £9,205?

It will apply from 2013-14.

The 2012-13 figure is £8,105.

So, in comparison, a basic rate taxpayer would gain £220 in a year. (20% of the difference).

However, an RPI increase was already promised for 2013, which would suggest a gain of around £170 a year.

AND tax accountants have been working on the basis that 2013 would see a rise to £8,735 anyway, because the 2010 Budget Report implied that increase would come at a rate of £630 a year.

On that basis the gain for a basic rate taxpayer would be £94 a year.

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