Many households will see income fall from "Worse Off Wednesday" - April 6 - as the one per cent rise in National Insurance contributions comes in.Nice alliteration but the story is a typical media tease. It references the changes in tax rates and allowances that take effect from 6 April, as well as the freeze in child benefit and changes to tax credits. The examples given in the article include a couple earning £20,000 who will be better off by £537 and others where the increase in tax will be less than £3 a week.
Monday, April 4, 2011
Tax tease: "Worse off Wednesday" is widiculous
I read about this in the Evening Standard on Friday 1st April but it's no April Fool. Then again I've not found anyone else writing about it, yet. But I bet they do on Wednesday although the origin of the phrase is unclear.
The Standard reports that:
But the amounts involved are not the reason this article is a tease. It's the fact that it's been conceived by someone with no knowledge of our tax system.
Whilst the rules that determine various tax changes take effect from 6 April, no one will feel it in their pocket that day. Anyone on a salary will only be part way through spending their March pay-packet. The same goes for pensioners. It is only when the salary or pension for April is received that the changes will come into effect.
And the impact on self employed people will take even longer to be felt. Because of the rules that determine when they pay their tax, they will have until 31 January 2013 (yes, thirteen) before they need settle any additional tax and NICs. That's because tax increases only affect the final instalment of their tax liabilities. This isn't payable until 31 January after the end of the new tax year that runs from 6 April 2011 to 5 April 2012.
"Worse off Wednesday"? I don't think so. What about you?