Take someone who earns £200,000 a year and who makes £20,000 of contributions to their pension scheme, which are matched by identical contributions from their employer.
In the current tax year 2009-10 their total tax bill, including national insurance contributions (NICs) will come to £67,689.
By 2011-12 they will have to pay more as follows:
• Tax on employer contributions: 30% on £20,000 = £6,000
• Tax relief on own pension contributions reduced by = £4,000
• Personal allowance lost = £2,590
• Impact of 50% tax rate = £5,000
• NICs: 1% extra on £194,285 = £1,943
• NICs: increase in start point = £91 saved
• Total extra tax = £19,442.
That is a whopping increase in that person's tax bill of 29%, to £87,131.
A LOT OF BRITS WILL BE MOVING. BUT JUST THE BEST EARNERS AND BIGGEST PRODUCERS.
IT'S THE DETROITIZATION OF BRITAIN.
SIGH.
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