As of April 2010, the UK’s new tax rates will take effect. Don’t panic though, for the vast majority of us, they will have no bearing what so ever. The changes to the amount of tax that you pay will only affect those whose annual income is over £100,000. There was also a statement in this year’s pre-budget report that said there are plans to increase people’sNational Insurance contributions by 0.5% as of April next year but this is to coincide with an increase in the NI threshold. So, those on lower salaries are not set to be negatively affected. In fact, the new tax brackets’ effect on those suffering from debt problems will be minimal.
Of course, that’s probably the idea. As the UK emerges from recession, the emergency interest rate and other financial management techniques have prevented the recession from becoming a full blown depression. Those who have suffered terribly during the credit crunch and are considering debt management or other solutions to their debt problems, will continue to benefit from the extremely low interest rates that have effectively reduced the amount of interest on their debt. This means that debt solutions like debt management will offer individuals in debt an easier, more affordable route out of debt.
Of course, those who have not benefited are the nation’s savers. Those with a lot of capitol have seen far less return on any investment than they’ve been used to over the boom years. It is also this group that will feel the bite of the new tax bracket. There will be a new income tax band for taxable income above £150,000. This will be tax the highest earners at a rate of 50%. That’s a 10% increase on what they’re currently paying.
The second significant change to tax legislation is a reduction in the level of personal allowance. Your personal allowance is the amount of money you’re allowed to earn before having to pay tax. So, if the government reduce this allowance, they’re able to collect more tax. Again, this ruling is only set to effect high earners. That is, those who take home over £100,000. In fact, for those in this situation, of every £2 you earn over £100,000 you currently take home £1.20. The new tax legislation will mean that people in this pay bracket will actually take home only £0.80 of that £2.
The Chancellor has said that, as the Retail Price Index (RPI) has shown deflation over the past 12 months, we will actually be better off than we were a year ago. This is good news to those facing debt problems as it will be easier to find a serviceable solution to the burden of bad debt. Consolidating your debts can be an ideal way to ease the financial stress each month. You’ll only have to deal with one monthly outgoing to your debt, rather than a host of creditors all clamoring for payment. You can also find a far better rate of interest. Visit business-magazine.org for more information.