Quote:
Originally Posted by MrRobin
Where have you got this?
In his speech, he says, and I quote from the bbc site:
"However, as the £600 increased personal allowance applies not just to basic rate taxpayers but also to those paying tax at a higher rate, I am therefore reducing the threshold at which an individual starts to pay tax at the higher rate by £600. "
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I think I get this now... it's relative to gross income, not taxable income -- very poor wording and use of naming thresholds / bands etc.
So what he means is that before, you would start paying 40% when your income reached £41,435 (Allowance of £5,435 + upper band of £36,000). By "reducing the threshold at which an individual starts to pay tax at the higher rate by £600" he means you would start paying 40% when your income reaches £40,835 (Allowance of £6,035 + upper band of
£34,800)
So the upper band has reduced by £1,200 and us contractors paying small salary and dividends will lose out if you pay divvies over the upper rate threshold.
