UK Families Are Highest Taxed in OECD

A new report shows that UK families with one employed parent are the most highly taxed in the OECD. A family earning £33,745 will pay 39% more tax than the average for 33 other OECD countries.

The report has provoked charities, as well as economists, into attacking the UK governments ant-family stance. In essence, Britain is punishing middle income families in order to fund a benefits system that encourages workless families to remain dependent on state handouts.

As we know, price inflation is now rising faster than incomes. In addition taxation in the form of higher VAT and national insurance is hitting family incomes even harder.

Fuel bills, fares to work, basic food stuffs, rent or mortgages, council tax and water rates have to be paid. Families have to look to make ends meet so discretionary spending has to be cut and savings have to be made. One area that is now under scrutiny is money spent on things such as family holidays and and another is children's parties. In recent years these items of expenditure are no longer considered luxuries. In each case families will be looking for value for money.

The UK government should take a look at other systems of family taxation. The gap between working families and those where everyone is dependent on the state has shrunk. In many cases families gain very little from gainful employment. This trend needs to be reversed.

Don't Pay for HMRC Tax Errors

UK workers are being told by financial experts that they have a legal right to avoid HMRC tax repayment demands.

The HMRC has made a huge number of errors in calculating the tax owed in previous years. Up to 5.7 million PAYE (pay as you earn) taxpayers are affected. About 4.3 million people have paid too much tax and will expect a rebate in their pay packets. A further 1.4 million have paid too little. It is this latter group who can expect a demand.

Essentially under a tax loophole it seems that if people have provided the correct information and the HMRC have made the wrong calculations and taken too little tax, the tax payer can ask to have any underpaid tax set aside.

HMRC Wrongly Fines Taxpayers

Britain's tax office, the HMRC, have wrongly fined 20,000 taxpayers for late submission of their 2007-8 tax returns.

UK taxpayers are fined £100 for failing to submit their returns by midnight on 31st January. Due to complaints from professional accountants the HMRC have admitted they have made mistakes. Indeed I am one of the victims. The problem I suspect is that the HMRC's computer systems cannot cope with requirement for taxpayers to make their submission online.

In my own case I tried to submit my return on the evening of 3oth January only to find the system rejected the password the HMRC had supplied me with. The following day an HMRC helpdesk operative got me to try using various browsers and computers without success. As a result of the systems failure I was given an extension. It took more than a week - until 12th February - before the HMRC could confirm that my return had been received.

Shockingly, 3 weeks later I received a letter informing me of my fine for late submission. The HMRC letter was dated 2 weeks prior to my receipt of it. I wrote back next day but have today (12th March 2009) received another letter (dated 5th March 2009) charging me with interest.

My only hope is that the revelation that thousands of taxpayers have been wrongly fined will lead to some form of amnesty.

The Great Labour Rip-Off

Welcome to the land of the Great Labour Rip-Off. Yes, we're finally getting the socialist tax regime we deserve. After 11 years of pretending they were business and entrepreneur friendly we are now getting the traditional Labour tax treatment.

For those who haven't fully digested yesterday's news, presented by Alistair Darling as an answer to the recession, many sections of the population are heading for a 60% plus rate of marginal tax.

Changes to National Insurance (NIC), tax thresholds and the imposition of 45% top rate of tax, will mean people at both ends of the income spectrum will have see less than 40p from each additional £ they earn. This is Scandinavian levels of taxation without the Scandinavian level of public services. I know, I used to live there.

During the early 1990s I was a higher earner living in Denmark, which had a top tax rate of 62%. Interestingly, this top rate included local income which was effectively the rates - now council tax. On top of this all my mortgage interest (and any other loan interest) was tax deductible. Secondly as a family, we claimed £120 per month per child in family allowance. When all the calculations were made my effective taxation rate was less than 30% of total income - and I was earning £65k a year in 1992, equivalent to say £150k now.

When everything was weighed up I was paying about the same net level of tax as I would have done under the then UK regime of John Major. But living in Denmark meant a World Class health system, clean streets and low crime. Soon, in Gordon Brown's socialist dystopia, you will have marginal tax rates of over 60%, with council tax, water rates, prescription charges, parking charges at your local hospital combined with third world levels of public services. How have we got here?

Chancellor Cuts Tax for Basic Rate Payers

Chancellor of the Exchequer Alistair has cut income tax for basic rate tax payers. He has done so by raising the basic rate threshold to £6,025. This is particularly advantageous for ow earners, many of which have been penalised by the 10p tax rate.

The cut is effective for the whole of the 2008/9 income tax year, although most tax payers will have to wait until September before they see any change to their take home pay. It appears that higher rate tax payers will not benefit from the move, as adjustments will be made to the higher rate threshold.

The cost of the move is estimated to be £2.7 billion. The Conservative Party have attacked the move on the basis of the timing. The Government faces a crucial by election on Thursday - just two days after the announcement.