Millions Of People Due To Gain a Tax Rebate This September
New tax measures come into force this month that will see about 22 million people receive a tax rebate of around £60.
It all stems from the U-turn by the chancellor on plans to scrap the lowest 10 pence tax band, following pressure from backbench MPs to ease its impact.
The new measures will mean basic rate taxpayers see a tax saving of £120.
They will have £60 less taken from their September pay packets and will then see their net pay rise by £10 per month for the rest of this tax year.
The effective cash-back comes because personal allowances for basic rate taxpayers go up by £600 to £6,035 from 7 September.
Self-employed taxpayers will not feel the benefit until they start paying tax from January 2009.
But so far the tax changes only apply for this financial year.
Critics of Chancellor Alistair Darling’s U-turn say that these tax rebates will also benefit middle-income taxpayers as much as those on smaller incomes.
It will also punch an estimated £2.7bn hole in the national finances as Britain faces a deep economic downturn.
“When the chancellor put this budget together he wasn’t expecting to lose £2.7bn, but I’m sure when he re-jigged his numbers, he will take account of this extra money,” said Chris Jones of tax advisers Lexis Nexis.
“However, what we need to bear in mind, it could be good news for the economy.
“Taxpayers with another £60 in their pocket may well go out and spend it. That could increase High Street profits.
“So it could in some way balance it [the cost of the rebate] out, but probably not to the full amount.”
The 22 million people who are supposed to benefit from this change are the basic rate taxpayers who pay tax at a rate of 20% and whose incomes are below the threshold for paying the higher rate tax of 40%.
This is far more than the 5.3 million people originally estimated to have been paying more tax now that the 10p tax rate has been abolished.
The 10p tax band was scrapped by Gordon Brown in his final budget as chancellor before becoming prime minister last year, at the same time as he cut the standard rate of income tax from 22% to 20% from April this year.
As it became clear that this would still leave millions of the lowest paid worse off than before, the government was forced in May to change its policy.
To offset the negative effect of abolishing the 10p tax rate, Chancellor Darling announced that the personal tax allowance would be increased by £600 to £6,035.
To stop higher rate tax payers also benefiting, the starting point for the 40% tax rate has been cut by £600.
At the start of this tax year, the higher rate began at an income of £41,435.
This would have been pushed up to £42,035 as a result of the £600 personal allowance increase, but will now start at £40,835 instead.
These changes to the personal allowance, and the adjustment for higher rate tax payers, initially apply only to the rest of the current tax year.
Employees who look closely at their pay slips will see the changes made by alterations to their personal allowances and their tax codes.
Mr Darling has yet to decide if, in his Pre-Budget Report this autumn, he will make any further changes to personal tax allowances next year or simply leave things as they are.
Protect Your Business by Securing Your Assets
Running your own business is no easy task. Apart from the entrepreneurial mindset it takes a good deal of knowledge, nerve and discipline to get over the obstacles that get in the way. If you are a business owner you are facing risks all the time. One of the most important risks you should be aware of is loosing your assets through lawsuits. In recent times we’ve been observing what is now called “litigation explosion” - it has been estimated that around 50 000 lawsuits are filed in the US every day. Anyone can sue you for literally anything. If you own a business there’s a great chance that sooner or later someone sues you and all what you have worked hard for will be placed in jeopardy.
To play on the safe side you should take steps to protect yourself and secure your assets as there are plenty of events that can lead to losing them:
- A negligence or injury claim that exceeds any insurance coverage you may have.
- Lawsuits from disgruntled business partners or employees.
- Claims from creditors should your business fail.
- Breach of contract through no fault of your own.
- Catastrophic medical bills.
One of the surefire ways to protect your assets is using corporation services in Nevada. You simply buy a Nevada Investment Holding LLC and transfer your assets to it. Spending some $ $ to do this can save you a fortune if something happens to your business in future.
Attractive Private and Business Options
Hedging pennies in stocks is quite a common trend nowadays. Generally, hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity. Typically, a hedger might invest in a security that he believes is under-priced relative to its fair value and combine this with a short sale of a related security or securities. Thus, the hedger is indifferent to the movements of the market as a whole, and is interested only in the performance of the under-priced security relative to the hedge. This obviously creates a number of advantages for the hedger. One can also find advantageous financial options on a smaller scale. One of the conspicuous examples would be Unsecured Cash, which enables you to borrow money without placing anything as security. Applying for an unsecured cash loan is both secure and confidential, no matter whether you apply from your home or office. An unsecured cash loan is optimal for small amounts. Depending on your repayment ability, the loan amount can be increased. For example, car loans depend on the costs of the car that you are going to buy and your income that you get. But if you want to take a loan to buy a new house or an expensive flat you must first of all get information about quotes for mortgage loans and only after that take it because you should carefully estimate your income potential. Also sometimes you have the facility to extend the due date and also choose the mode of repayment, which makes this method even more attractive.
FTSE Top 100 Pensions Show a Funding Deficate
Pension funds of firms listed in the FTSE 100 stock index are back in the red after big annual swing in funding levels the largest since 2002.
Actuarial group Lane Clark & Peacock (LCP) found that the pension funds had a net deficit of £41bn in mid-July.
This compared with a £12bn surplus in mid-July 2007, which had been the first surplus for five years.
But the report said that the deficit could have been far worse but for firms re-stocking their pension schemes.
‘Volatility’
The actuaries said that the past year had been one of the most remarkable in the 15 years in which they had been producing their annual report.
“Not only have we had fears of rising inflation, which has driven up the liabilities of pension funds and the amounts companies need to hold, but the stock markets have been volatile, and recent falls have reduced the value of the assets,” said Bob Scott, a senior partner at LCP.
Last year’s ’surplus’ lulled people into a false sense of security
Dr Ros Altmann, Pensions expert
The position could have been worse, but for these companies pumping nearly £40bn into their pension schemes over the past three years and taking some steps to reduce risks.
The analysis by LCP suggests that the pension schemes of big firms quoted on the stock market are in an unhealthier position than final salary schemes generally.
Each month the Pension Protection Fund publishes an analysis of their financial position of nearly all 7,783 such schemes in the UK, which are mainly in the private sector.
In June they had a collective surplus of just £8bn, down sharply from £53bn at the end of May and far worse than the position a year ago when the schemes enjoyed a surplus of £130bn between them.
The PPF said 71% of schemes were in deficit while 29% were in surplus.
Warning
Mr Scott said that the brief period of surplus until early 2008 had allowed some companies to take the opportunity to cut down on their pension risks, by offloading their schemes or investing less in shares.
But he was keen to give a warning about the future for pension funds.
“No sooner have companies breathed a sigh of relief about returning to surplus but they are back to multi-billion pound deficits,” he said.
“With a possible recession looming and the threat of further regulatory intervention, the outlook for continuing defined benefit provision seems rather bleak.”
Dr Ros Altmann, a former government adviser on pensions, commented that the LCP report was worrying reading.
“Last year’s ’surplus’ lulled people into a false sense of security but was probably an illusion,” she said.
“The research shows pension contributions fell from £13.4bn to £13.1bn over the year and suggests that most companies have not done much to reduce their pension risks.
“It is inevitable that employers will keep on closing schemes to both new and existing members, especially in the face of so much uncertainty around the funding and costs,” she added
EDF Raise Prices For Domestic Customers
EDF Energy has announced it is putting up gas prices by 22% and electricity prices by 17% for domestic customers.
EDF have blamed the increase, which comes into effect on 25 July, on record wholesale energy costs.
Energy companies have been expected to raise the costs of utility bills this summer, as wholesale prices have been rising.
EDF is the first of the major suppliers to raise prices this summer but others are expected to follow suit.
The company said it had been absorbing higher costs over recent months but it now needs to pass on costs to domestic and small business customers.
Bank Mortgage Lending Falls By 20%
The British Bankers Association (BBA) said that in May, the number of new approvals for mortgages to home buyers fell to just 28,000.
This is a drop from 20% in just one month and 56% below May last year.
The BBA said the number of new approvals was the lowest since record began in 1997 and warned that the market remains weak.
“Measures were lower mortgage activity in May as a result of tighter lending criteria and economic pressures on households,” said David Dooks, BBA.
“Only remortgaging business is the conclusion, where people need or want to take advantage of agreements with other lenders,” he added.
BBA members represent about two-thirds of total mortgage lending in the UK.
Contraction
The UK housing market is undergoing a rapid and unprecedented decline in activity and sales.
The supply of mortgage funds, which largely comes from lenders in international financial markets, has been largely turned off due to the continued credit crunch that began almost a year ago.
Many participants in the real estate market, as house builders, mortgage lenders, house builders, realtors and experts have been telling the same story, with widespread predictions that sales will fall between 35% and 45% in the course of 2008.
The effect has been that housing prices have fallen in recent months, with many experts now expect a fall of over 10% at the end of the year.
Mortgage approvals are widely seen as a good indicator of sales in the coming months.
The BBA figures suggest the most dramatic contraction in loans so far.
However, their data does not include the construction of societies. Figures for all lenders will be published by the Bank of England on June 30.
‘Deep correction’
Howard Archer, chief UK and European economist at Global Insight, said: “More data on the housing market, much more disturbing news that raise concern that we are in for a long, deep correction in the market housing.
“The BBA data graphically emphasized that the activity in the housing market is being throttled by stretched affordability and tight lending conditions.
“Very low activity in the housing market seems certain to feed through to further depress already significantly weaken house prices.