Gordon's Budget means grey skies ahead for Sunnie

ITV News were kind enough to invite me to be the money expert on their Budget bulletins yesterday. It was a very long day in around Birmingham, starting at Chancellor Court (get it?) at Birmingham University.

Watch the video

It was a real insight to be able to analyse the finances of dozens of people. The This is Money team and I were able to identify the losers in this Budget right away. Sunnie Sohal was a young woman working hard to buy her first flat. But Because she earns a relatively low wage, she will pay more income tax.

Before, nobody paid tax on around the first £5,000, then you paid 10% on the next £2,000ish. After that you paid 22% (and 40% above £38,000) Now, you still pay nothing on the first bit, but the 10% is gone. So you start paying a new slightly lower 22% but on more of your earnings.

Accountants Grant Thornton were kind enough to crunch the numbers. If you earn less £24,000 then you will now pay £56 a year more in tax. If you earn £15,000, it's £70. The lower the wage, the bigger the increase (down to the 0% threshold).

If you have a family, then you would have had a boost on tax credits. That doesn't help Sunnie who now has to wait even longer for her first home.

Andrew Oxlade, Editor
www.thisismoney.co.uk

PS - You can read all our Budget coverage by following these links.

>> Budget 2007 round up
>> Budget 2007: Key points at a glance

Comments

[Craig]

What I can't get my head around is the government's desire to see more people apply for tax credits.

It's an unwieldy system that seems to cost a fortune to run and you still hear stories of errors that put people in a deeper hole, forcing them to pay back overpayments.

Does the government believe the majority of people on low incomes can't be trusted to make their own financial decisions?

So instead we have the ludicrous situation of low income earners paying more tax to receive the money back via the tax credit system.

It leaves you just shaking your head.

[Peter Urquhart]

Get your own back on Gordon!
All the good things in the budget are one or two years ahead. If you have money on deposit with interest credited to 31st March 2007 reinvest the money on 6th April 2007 in an account which credits interest annually (i.e. on 6th April 2008) and you will have the advantage of the higher allowances for the tax year 2008/9 particularly if you pay tax at 40%.
Don't get mad - get even!
Tips from others more than welcome!

[Barry8]

How on earth can New Labour manage to con a whole country so supremely easily? I hear that there a rumour re impeachment. Just what is that and who instigates it? For Why?
It looks like the people of this country have a right to be involved; it is not just a matter for politicians. Or is it?

[john hay]

I'm a pensioner on £13k per year with no options to claim tax credits , so I will be paying more tax. I am not happy about this at all.