It’s Monday again, and it’s also almost the last week of the month, which for me means one thing – Payroll processing. And I’m not looking forward to this month’s payroll for one reason. Alistair Darling. Last week, our Chancellor of the Exchequer did a massive U-turn on behalf of the government designed to make amends for the utter cock-up over the 10p tax band. I guess at this point I should elaborate for those of you who don’t reside in this Kingdom we call United (shame it isn’t all that united really).
When Labour came to power as the government of the people after many, many long years of the Tories, Gordon Brown introduced a new, low rate, starting tax band. Put simply, instead of getting a tax free allowance and then moving on to basic rate tax, everyone now got a tax free allowance, then paid 10p in every pound on a small portion of their income, then moved onto Basic rate tax (22p in the pound) and, if they were high enough earners, higher rate tax (40%).
But in his last budget before he became PM, Gordon got rid of the 10p band and reduced the 22p band to 20p. This had the effect of ensuring that a great many middle-income families were better off by a few quid a month – ideal for a PM who might want to go to the polls. wouldn't you say?
But Gordon didn’t go to the polls. He chickened out because he though me might actually lose. And now the 10p tax has come back to haunt him. Even though he announced it in March 2007, the measure didn’t take effect until this past April. And the problem with it is that there are a lot of low-income families who are actually paying more tax as a result, not less. The type of families that Labour claims to represent. Oh, sure, some families will claim tax credits or other state benefits and be better off, but there are still millions of people not entitled to these credits who will lose out – such as the three sexy 19-year-olds in my office………
Sorry, lost my train of thought there. Can’t think why. Where was I? Oh, yes. Sexy 19-year-olds. No, that’s were I got lost. Oh, yes, tax.
So, Gordon got rid of the 10p tax band and lots of people lose out. Lots of people are upset about this, including many Labour MPs who can see their majorities slipping away at the next election like, well, like voters choosing to vote for the Tories again. But the problem is now Alistair Darling’s to solve. So what does he do? The only thing that’s really open to him at this point. He increases everyone’s tax free allowance so that all the people who lost out, no longer lose out. Well, most of them anyway. Of course, the fact that the rest of us also gain by around £120 per year is no bad thing either – especially if it means we still vote for these idiots, which I’m sure some people will.
But here’s where it affects me. I’ve got to run payroll today. And tax allowances are determined by tax codes. So do I have to change everyone’s tax code? Or do I have to wait until I get coding notices from HMRC? And if I have to wait, how do I explain that to 30 workers eager to see their payslips showing less tax paid? As you might guess, there’s nothing about this on the HMRC website. No communication sent out to us poor saps that have to process things.
So I guess I’ll have to muddle along and when the complaints come in I’ll explain that you’ll probably get your tax gift in one go later in the year.
Sometimes, I hate this government. No, wiat, make that just simply, I hate this damn government.