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Your Questions To The Budget Tax Clinic
March 11, 2008

Are you confused about what the 2008 Budget means for you?

We asked Sky News online readers to send in their questions, and got Matt Coward from chartered accountants Blick Rothenberg to provide the answers.

Matt has replied to the most popular queries here .

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I am a 30 year old mother of two.  My partner earns £21k a year and I earn £5k a year.
We can only aford a holiday once every seven years, we only just scrape together enough money to pay rent and council tax we only have about £60 a week for food, clothing etc.  The rest goes on household bills.
So my Q is why is the govenment turning into THE SHERRIF OF NOTTINGHAM and when will we get a ROBIN HOOD to help all those who cant live in the uk any more.
We need help NOT more TAXES. 
Posted by: Beverly Storey - Norwich. 

Beverley has clearly set out the stresses associated with balancing the family budget.   However, on the basis of a combined income of £26,000 a year, if  you claim all the tax credits you are entitled to, you will be approximately £800 better off in 2008/09.

I am 32 with a 16 month old. My partner works 48 hours a week for £15300pa. I do not work. We run a small 10 year old car. Are we benefiting from the Budget?  Posted by: K Smith

If you claim all the tax credits that you are entitled to, you should be about £675 better off in 2008/09 than you are in 2007/08. However, the rise in fuel duty of 2p per litre which goes up in October this year, may cut into this saving later in the year.

My 80th birthday was 2nd Feb 2008. My wife's 76th birthday was 19th Sept 2007. Do we both qualify for the increased winter heating allowance? Posted by: Mr D. Wightman

Each of you will get the increased Winter Fuel allowance (£400 per person for the over eighties, £250 per person for those over sixty).  In addition to the increased winter heating allowance, the Budget notes said that an “over eighties” household will receive an extra £100 in 2008/09 to help with fuel costs.

My husband and I arrived in the UK in July 1999, he is General Manager in a Hotel in London and his earnings are around £50,000 per year, we are registered in our Consulate and we considered ourselves as UK residents; as we have been already here for 9 years next july, are we considered non-doms and do we have to pay the £30,000 per year?, if this is the case, considering that we have 3 children under 17 basicaly we can hardly eat at the end of the month.  Posted by: Laura, Oxford

Dear Laura,  I note that you mention that you are registered with your Consulate;  those with diplomatic immunity and members of embassy staff are subject to a special set of rules.

You asked whether you are non UK domiciled. Generally, a person is considered non domiciled in the UK if this country was not your country of domicile at birth or your father’s country of domicile. All non domiciled individuals are affected by the rule changes confirmed in the Budget, taking effect from 6 April 2008.

Assuming that you are not covered by Diplomatic immunity, if you are resident in the UK and non-UK domiciled  you will have choice to make about how you will be taxed.

You could either choose to be taxed on a worldwide arising basis, whereby you would be taxed on all your income and gains wherever it arises in the world (subject to relief for overseas tax suffered) or you could choose to be taxed on a remittance basis.

The remittance basis means that you are charged on any income and gains from overseas but only if you remit them to the UK during the tax year.  However, those who choose to be taxed on a remittance basis, and have been resident in the UK for over 7 out of the last 9 tax years (as you have), will be subject to the £30,000 annual charge and will lose their personal allowances and annual capital gains allowance, unless the income generated by their foreign income and gains is below £2,000; in that case they can taxed on a remittance basis and keep their allowances.  If you have modest amounts of overseas income, the answer is to choose not to pay the £30,000, and pay UK tax on your worldwide income.

What are the implications for people like myself who are on Disability Living Allowance and are counted as being on "Incapacity Benefit" what are the Work Tests that are being proposed and why are the government "persecuting" people like myself who are truly incapacitated and unable to work?  Posted by: Alan , Tyne & Wear

Thank you for raising this important issue Alan. Mr Darling announced in his budget that from April 2010, all incapacity benefit claimants will be required to undergo Work Capability Assessments to show that they are unfit to work. This is to ensure that people currently on benefit are in line with all new claimants who from October 2008 will be required to take this test. This is aimed at reducing the number of  so-called “bogus” incapacity benefit claims made. The Government has confirmed that  the new test should not affect payments to genuinely disabled individuals.

"I am a single parent with one child, working part time on less than £10,000. I have a matrix car and I am on housing benifit. I would like to know how this budget will benefit me. Is it just a case of give with the right hand and take with the left? I do not drink or smoke."
Posted by: Tracy - West Midlands.

Thanks for your question Tracy. You will be better off as a result of child tax credit and working tax credit, but the abolition of the 10% starter rate of income tax will cost you around £2 per week. Overall though, I calculate that you will be around £60 per month better off. This is assuming that you make a claim for all the working tax credits and child tax credits that you are entitled to.

"I currently run a 2004 Ford Mondeo on VED Band F (244g/km), is it right that from next year it will be rebanded to Band L (226-255g/km) with an increase in cost from £210 to £415?"
Posted by: Ian, Manchester.

Ian, you will remain in band F if your car was registered before 23 March 2006, though the annual VED will rise £5.

"I am a UK national expat living and working in Kuwait, with no income tax payable. How will the new tax rules on non-domiciles effect me? I have been out of the UK for one year."
Posted by: Lammers, Kuwait.

There is a difference between domicile and residence. The new rules affect non-domicilaries (generally, those who were born outside the UK). As a UK non-resident, you will however have to watch your days of residence in the UK which are being tightened from 6 April to include travel days into the UK.

"I am a non-dom from the USA. I arrived on 7th April 2001. Do I have another year before I must comply with the non-dom rules?"
Posted by: Diana, Suffolk.

Diana, as you came to the UK in the 2001/2002 tax year, you will have been in the UK for the seven out of the past nine tax years in 2008/2009. You will need to choose between paying the £30,000 annual charge to maintain the benefit of the remittance basis of taxation, or paying tax on your worldwide income and gains. In a long and very detailed memorandum published today, it seems that the £30,000 annual charge will be creditable for US taxpayers.

"What happened to the change to Capital Gains Tax discussed last year and supposedly due to change in April 2008? Is that not happening now?"
Posted by: Jon, London.

The Capital Gains Tax changes are being introduced as announced, with a flat rate of 18% on all gains for disposals after 6 April 2008.  This was a real increase in tax on sale of a business, so entrepreneur’s relief is being introduced which effectively charges a 10% CGT rate on business gains up to a lifetime allowance of £1m. All business owners can potentially benefit from the relief, but company owners need to be directors or employees in the company for a year up to the date of sale and have 5% shareholding throughout that period.

"Has the main Capital Gains Tax amount changed at all or is there a sliding scale? I am asking this as I own more than one house so I am specifically interested in this area."
Posted by: J Haigh.

From 6th April 2008, Capital Gains Tax will be set at a flat rate of 18% of all gains over the annual exemption of £9,600; those with second properties will benefit from a lower rate of tax on disposal. Currently the best tax rate on disposal of a buy to let property is 24%, after owning the property for ten years (assuming you are a higher rate taxpayer). That reduces to 18% for disposals in 2008/2009 and onwards.

"My husband gets a private pension of £448 per month and old age pension of £104 per week. He is taxed £46 per month from his private pension. Will he now be better off after the Budget?"
Posted by: Ann, Staffordshire.

Ann, you're likely to be pleased by today’s increase in the winter fuel allowance, which will rise by £50 for the over 60s to £250 per annum and by £100 for the over 80s to £400 per annum. In addition, there are also larger than inflation rises in the personal allowances for those individuals over the age of 65. Your husband should therefore be approximately £150 better off for 2008/2009 if he is under 80 and £200 better off if he is over 80 years of age.

"What will be the higher rate Income Tax level (ie. 40%) for 2008/09?"
Posted by: Mr Yates

This will again be 40% starting on taxable income over £36,000. There will be only two rate bands for Income Tax in 2008/2009, the basic rate 20% and the higher rate, 40%.

"I am under 30, earning around £27k. I own my own apartment, have a small car, no children or partner. How will a normal and yet usually ignored section of our community (those without children) be affected?"
Posted by: Beth, Midlands

In 2008/09 you should pay approximately £230 less tax & national insurance than you will have in 2007/08. A 2p increase in fuel duty per litre of petrol has been postponed for six months. If you smoke, you will be hit by an 11p increase per packet of 20 cigarettes from tonight and you will find that a bottle of wine is up by 14p, a pint of beer is up by 4p and spirits are up by 55p from Sunday.

::Download TaxFax 08/09, Blick Rothenberg's taxation guide, prepared exclusively for Sky News Online

Written by Sky News, March 11, 2008

Comments

My husband earns £30k but i am unable to work due to osteoarthritis,i have tried 3 times to claim disability but have been turned down each time.My question is why does my hubby have to pay 44% tax,we dont go on holiday,pay all our bills,run an old car and have 3 dependant children and don't say claim tax credits as £10 a month goes no where.Its about time that the Government stopped handing out money to foreign countries and stopped using our tax to furnish their 2nd homes (when i can't afford to buy even one. Its about time you looked to who made Britain----us the ordinary people and give something back to us to make our lives easier.Also what about the pensioners who fought for this country,they get diddly squat!! Now that is disgusting.


please can you tell me what more help people will get coming off benifit.ie people with 4 children and childcare cost in school hoildays esp if soneone has a child under school age school hoils are long in 6 weeks so hows a lowincome family going to cope if both parents are working having childen look after in non school time is my worry the cost would leave us unable to pay rent or tax


Is worldwide income taxable for a UK national? If someone has dual US and UK nationality and resides in the UK, do they have to pay taxes on US income if it is taxed in the US and never remitted to the UK? Does that income need to be declared to the UK? Since the US and UK tax years differ, how does one sort out what to pay whom??


My husband had a really bad industrial accident some years agoo and has since been receiving disability living allowance, industrial injuries and incapacity benefit(may sound a lot..but it isnt) . He is now partially sighted, partially deaf, suffers with other physical mobility problems through the accident and work in the steel industry. What will happen to us as a family if he is forced to work when he cant manage to do it. How will we live.
We have both worked from being sixteen (and before that), we have both paid into the system but face very challenging circumstances making ends meet (it is not easy believe me...it is not a bed of roses like some people think it is).
I care for my husband and support him...how are we going to manage if we lose the money we rely on. Please bear in mind we are proud people and hate relying on anyone, we always held our own..but now feel like scroungers and that the government are out to clobber us (literally)

What do genuine people like us do??


Give it a year and I bet [Kool & The Gang] will say [Lets Go Dancing]!


I live in Inverness Scotland the fuel went from 106.9 to 108.9 last night here,that is petrol( unleaded). If they go through with the council tax changing to income tax I and my husband will be paying £650.00 each that will be £200 more than now(Paying £1,199 a year for a one bedroom flat in Inverness not London). cost of food goes up because they have to travel so far to the north of Scotland so we can purchase it, so they have to put up the cost.Car Tax will kill us even more due to the fact that we live in probably the most remote CITY in Scotland we have to have cars due to having to travel so much more distance. Also I don't have children so that adds even more . The Mr Darlings and Mr Browns of this world are living in fantasy land I only earn £14'500 a year and so does my husband. What have they done for me except made me more skint(thats Short of money).????????????????????


I am a single mother of two who works part-time and receives working tax and child tax credits. I believe I shall be slightly better off, is this the case? i don't own a car, I don't drink but I do smoke


I am a key worker and am in the process of buying a shared ownership new build flat. I will be owning 50%. Will the new rules on stamp duty mean that I will not have to pay as I have not yet exchanged contracts?


I am single, non smoking, work full time earning £19,000, currently living in private rented accommodation. Am I financially worse off because of the new Income Tax in bands for 2008/2009?


All this bother about emissions
I'll show you what emissions is
In my street we have empty buses
double and single every time they turn in they hit the kerb
at the other side beside my house they overfill them they
leak diesel all over the road
it's a health hazzard myself and
some of the residents have asthma and toll to breathe.
The council won't do anything
about this .has the bus got
to land in my garden before
they will do anything
So this is worse than any 4x4


I am 32 with a 16 month old. My partner works 48 hours a week for £15300pa. I do not work. We run a small 10 year old car. Are we benefiting from the Budget today?


My 80th birthday was 2nd Feb 2008. My wife's 76th birthday was 19th Sept 2007. Do we both qualify for the increased winter heating allowance?


i currently own a 1985 landrover 2.5 diesel will the tax be rising for this vehicle.?


I am a single parent with one child earning £7000 a year. I am a home owner with a high interest rate mortgage and I drive a ford focus 1800 zetec. I do,nt smoke or drink. I am struggling at the moment. Can you tell me if I would be worse or better off with this budget as I am really worried about it.


My husband and I arrived in the UK in July 1999, he is General Manager in a Hotel in London and his earnings are around £50000 per year, we are registered in our Consulate and we considered ourselves as UK residents; as we have been already here for 9 years next july, are we considered non-doms and do we have to pay the £30000 per year?, if these is the case, considering that we have 3 children under 17 basicaly we can hardly eat at the end of the month.
Laura


Who holds the caSH


I would like to know how does this budget benifit me?
I am a single parent with one child, working part time on less than £10,000. I have a matrix car and i am on housing benifit.
is it just a caser of give with the right hand and take with the left? I do not drink or smoke


My husband gets a private pension of £448 per month and old age pension of £104 per week ,he is stopped £46 tax per month from his private pension will he now be better off after the budget ?


Hi all you with hi IQ's ( or thoughs who know what the figers meen)
I am a 30 year old mother of 2 and have been with my childrens father for 14 year.
My partner earns 21k ayear and I earn 5k ayear.
We can only aford a holiday once every seven years,
we only just scrape enough money to pay rent and council tax we only have about £60 a week for food, clothing ect
the rest go's on house hold bills.
Thankfully we went bankrupt lats year and dont need to pay 32k in dept we were in.
So my Q is why is the govenment turning into THE SHERIF OF NOTTINGHAM and when will we get a ROBBIN HOOD to help all thous who cant live in the uk any moor.
I AM NOT PROUD TO BRITISH.
We need help NOT moor TAX'S.


I currently run a 2004 Ford Mondeo on VED Band F (244g/km), is it right that from next year it will be rebanded to Band L(226-255g/km) and a increase in cost from £210 to £415 ?


Bingo has had double taxation for years 15% gross profit as well as 17.5% vat has he removed one of these taxes or will the industry suffer more closures due to over taxation


I am a UK national expat living and working in Kuwait, with no income tax payable, how will the new tax rules on non-domiciles effect me? I have been out of the UK for 1 year at present.


If ths usa is in debt, uk is in debt as is france and germany and most of the world,
who holds the money. Mabye
some guy without a degree
could answer this because all
the ones with degrees don't
know.


kindest regards
t s taylor.


What are the implications for people like myself who are on Disability Living Allowance and are counted as being on "Incapacity Benefit" what are the Work Tests that are being proposed and why are the government "Persecuting" people like myself who are truly incapacitated and unable to work


What has been done with the huge amount of extra tax raised through fuel duty, with the price being 20 per litre more than this time last year. Surely the government could have slashed the rate of fuel duty


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