Topical Issues

TAXES:

Changes to the personal allowance as of September 2008. The personal allowance is the amount of money someone earns before they have to start paying tax – the basic allowance for 2008/09 tax year is £5,435. However, there will be a change in September 2008 when the allowance will be backdated to April 2008 to £6,035. This is called the Extra Personal Allowance and was announced by the Chancellor earlier this year following criticism about removing the 10p rate of tax.

The changes mean that From the first pay day on or after 7 September 2008, there will be a tax saving of approximately £120 over the course of the tax year. This means for those whose pay day in September is on or after 7 September, they will pay up to £60 less tax that month. 

For those who are paid monthly and their pay day is before 7 September, they will pay up to £70 less tax in October.

To add to the potential confusion, any tax reduction will depend on how much people have already paid. In some cases, people may even get a repayment included in their pay.  From September onwards, people who are paid monthly will pay the taxman up to £10 a month less tax; if they are paid weekly, they will hand over to the taxman up to £2.30 less tax. 

The basic rate tax band will reduce from £36,000 to £34,800. Anything above that amount will then fall into the 40% tax band.