Samui Ex-Servicemen June Meet Up

Hope all who attended the June Samui Ex-Servicemen meet up at The Red Fox in Lamai had an enjoyable afternoon. Thanks to Alan our host for the excellent stew, a real taste of home. As usual a few topics were discussed and a few beers consumed.

If you are ever in Hong Kong, a recommendation for a cheap pint, was the Mariners Club just over the road from the Star Ferry terminal.

For July's get together it was decided to return to our original venue The Elephant and Castle in Bang Rak on the 29th July at 4:30 pm. Hope to see everybody there.

Here is some information that may be of interest to some of us:

Chancellor Alistair Darling has announced changes to the personal allowance in a bid to defuse the 10p tax row.

The move was intended to compensate the 5.3 million households who lost out when the 10p tax rate was abolished.

It will mean more money for several million people paying the basic tax rate, but administrative work for some businesses.

So how will it affect you?

How did this come about?

A series of tax changes came in at the start of the financial year, on 6 April. They had been announced in Gordon Brown's final Budget as chancellor in 2007 and in the later pre-Budget report.

The changes saw the 10% starter rate of income tax abolished, except on savings income for people who are low paid. The basic tax rate came down to 20% from 22%.

When 5.3 million people realised this meant less money in their pocket, many spoke out leading to a backbench rebellion by Labour MPs.

What changes have now been announced by the chancellor?

Alistair Darling said he wanted to compensate the people who lost out.

He is borrowing £2.7bn to raise personal tax allowance by £600 to £6,035.

This means anyone earning up to about £40,835 will gain £120 this year.

Mr Darling said 4.2 million of those households which lost out previously will receive as much or more than they lost when the 10p starting rate of tax was axed, and the remaining 1.1m households will see their loss at least halved.

The biggest losers, experts say, would be some of the very lowest earners who do not have families and do not work enough hours to claim tax credits.

What is my personal allowance?

The personal allowance means you earn a certain amount of income without paying any tax at all. Income tax starts being paid on earnings above this amount.

Personal allowances are amended each year in the Budget, and usually they go up with inflation.

In the current tax year 2008/2009 the basic personal allowance was set at £5,435 (up from £5,225 the previous year) but has now gone up by £600, a rise backdated until 6 April.

People can expect a £60 lump sum in September pay packets, followed by a £10 monthly increase until the end of the year.

The chancellor's announcement was extremely unusual as it made changes to the tax system after the Budget - a move not seen by a chancellor for around 15 years.

Won't the better off gain too?

Around 17 million middle-income earners, who did not lose out when the 10p rate was axed, will gain from what the Institute of Fiscal Studies (IFS) described as a "simple and expensive option".

Extra money for these people makes up around £2bn of the £2.7bn handout, the IFS says.

Mr Darling said he would lower the starting point at which the 40p tax band is paid by £600 to £40,835, so the most well-off would not gain more.

This will push 150,000 people into the higher 40p tax rate but the Treasury said that these people would still benefit from the extra £120 this year.

It remains to be seen what will happen next year, as all these changes are for this year only.

It also remains to be seen whether this move - which will give millions of people a little more spending power - will cut the chances of a fall in interest rates in the coming months.

What does it mean for people running small businesses?

While many low and middle income earners will gain, there are some issues to deal with for those who pay them.

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Accountants, said businesses systems and processes will have to be updated halfway through the tax year in September.

"SMEs represent over 99% of UK businesses, and they will have to change their PAYE codes and tax systems," he said.

Ref: BBC News: http://news.bbc.co.uk/2/hi/business/7399105.stm