Connect with us

Published

on

National insurance has been cut by a further 2p, so workers will pay 8% of their earnings between £12,570 and £50,270, instead of the 12% it was before Autumn.

But tax thresholds – the amount you are allowed to earn before you start paying tax (and national insurance) and before you start paying the higher rate of tax – will remain frozen.

Follow live reaction to Budget 2024

This means people end up paying more tax than they otherwise would, when their pay rises with inflation but the thresholds don’t keep up. That phenomenon is known as “fiscal drag” and it’s often called a “stealth tax” because it’s not as noticeable immediately in your pay packet.

Enter your salary to the nearest £1,000 in our calculator to see how much better or worse off you are overall, once they balance out against one another.

That low threshold of £12,570 has been in place since April 2021. The Office for Budget Responsibility say that if it had increased with inflation as normal it would be set at £15,220 for 2024/25.

Workers would earn an extra £2,650 tax free each year in that case.

The higher threshold would be more than £61,000, meaning someone on a £60,000 salary would be paying the 40% income tax rate on almost £10,000 more of their earnings.

That would cost an extra £2,000 over the course of a year, more than offsetting the gains from cuts to national insurance.

Overall, workers are better off if they earn between £32,000 and £55,000, or more than £131,000, but everyone else will be paying more in 2024/25 than they would have done if the government had raised the tax thresholds as normal.

Someone on a £50,000 salary is best off, by £752 a year – not far off what the average package holiday to Europe cost in 2023.

That’s because they benefit from the maximum amount of lower national insurance before falling into the high tax bracket.

But someone on £16,000 a year will pay £607 more in total – equivalent to more than three months of average household spending on food.

Their income level means national insurance savings are limited but they are paying 20% in income tax on an additional £2,650 of earnings.

The calculations don’t account for any more complex tax deductions or credits for different groups of people, for example student loans, pensions or childcare.

But separate Sky News data analysis shows how young graduates now take home £1,200 less on average each month than they did before the pandemic after adjusting for inflation.

Methodology

Sky News has taken figures for what the new thresholds from 6 April 2024 would have been if they had increased with inflation from the Office for Budget Responsbility.

To work out how much less national insurance people will pay in 2024/25, we have worked out how much you would have paid on the 12% rate with the current thresholds, and how much you will pay on the 8% rate. This value will always be positive if you earn more than £12,570.

To work out how much fiscal drag has cost you, we have applied the new thresholds from ICAEW to the lower 20% rate of tax, the higher 40% rate, and the highest 45% rate. We have also assumed that the taper, when you start losing your personal allowance, starts at £100,000 and you lose £1 for each additional £2 earned, as it was before. This value will always be negative if you earn more than £12,570.

We ran the workings for these calculations by the Chartered Institute of Taxation who corroborated our findings.

To work out the difference we have taken the fiscal drag figure away from the national insurance figure. If it’s a positive number you are taking home more pay, but if it’s negative you are taking home less pay.

That means that the fiscal drag savings assume that national insurance is 8% rather than the 12% it was before. If national insurance had stayed at 12%, the effect of fiscal drag would have been even greater for lower earners.


The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open-source information. Through multimedia storytelling, we aim to better explain the world while also showing how our journalism is done.

Continue Reading

Business

Jaguar Land Rover cyberattack pushes overall UK car production down more than a quarter

Published

on

By

 Jaguar Land Rover cyberattack pushes overall UK car production down more than a quarter

UK car production fell by more than a quarter (27.1%) last month as a cyberattack at Jaguar Land Rover halted manufacturing at the plant, industry figures show.

The total number of vehicles coming off assembly lines – including cars and vans – fell an even sharper 35.9%, according to September data from the Society of Motor Manufacturers and Traders (SMMT).

“Largely responsible” for the drop was the five-week pause in production at Jaguar Land Rover (JLR) due to a malicious cyber attack, as other car makers reported growth.

Money latest: Restaurant sends bitter message to customers

JLR’s assembly lines in the West Midlands and Halewood on Merseyside were paused from late August to early October as a result.

During this time, not a single vehicle was made. Production has since restarted, but the attack is believed to have been the “most financially damaging” in UK history at an estimated cost of £1.9bn, according to the security body the Cyber Monitoring Centre.

It was the lowest number of cars made in any September in the UK since 1952, including during the COVID-19 lockdown.

More on Cyber Attacks

Please use Chrome browser for a more accessible video player

Are we in a cyber attack ‘epidemic’?

Despite the restart, the sector remains “under immense pressure”, the SMMT’s chief executive Mike Hawes said.

The phased restart of operations led to a small boost in manufacturing output this month, according to a closely watched survey.

Of the cars that were made, nearly half (47.8%) were battery electric, plug-in hybrid or hybrid.

The vast majority, 76% of the total vehicles output, were made for export.

The top destinations are the European Union, US, Turkey, Japan and South Korea.

JLR was just the latest business to be the subject of a cyberattack.

Harrods, the Co-Op, and Marks and Spencer, are among the companies that have struggled in the past year with such attacks.

Continue Reading

Business

English Championship side Sheffield Wednesday file for administration

Published

on

By

English Championship side Sheffield Wednesday file for administration

Championship club Sheffield Wednesday have filed for administration, according to a court filing, which will result in the already struggling side being hit with a 12-point deduction.

The South Yorkshire club currently sit bottom of the Championship, the second tier of English football, with just six points from 11 games.

Known as The Owls, Wednesday are one of the oldest surviving clubs in world football, with more than 150 years of history.

Court records confirm the club have filed for administration. A notice was filed at a specialist court at 10.01am.

Please use Chrome browser for a more accessible video player

Sky’s Rob Harris reports on the news that Sheffield Wednesday have filed for administration

What has happened?

The Owls, who host Oxford United on Saturday, have been in turmoil for a long time.

On 3 June, owner Dejphon Chansiri, a Thai canned fish magnate who took over the club in 2015, was charged with breaching EFL regulations regarding payment obligations.

Sheffield Wednesday fans protest the ownership at a game away to Leeds United in January. Pic: Reuters
Image:
Sheffield Wednesday fans protest the ownership at a game away to Leeds United in January. Pic: Reuters

Weeks later, Mr Chansiri said he was willing to sell the club in a statement on their official website.

Sheffield Wednesday's troubles have sparked furious protests from fans. Pic: PA
Image:
Sheffield Wednesday’s troubles have sparked furious protests from fans. Pic: PA

Their crisis deepened just days later when another embargo was imposed on the club relating to payments owed to HMRC, before players and staff were not paid on time on 30 June.

In the months that followed, forwards Josh Windass and Michael Smith left the club by mutual consent. Manager Danny Rohl, now at Rangers, also left by mutual consent.

Please use Chrome browser for a more accessible video player

Frustrated Sheffield Wednesday supporters have targeted their embattled club’s owner in a highly-visible protest during their opening match of the season.

The Owls were forced to close the 9,255-capacity North Stand at Hillsborough after a Prohibition Notice was issued by Sheffield City Council.

‘Current uncertainty’

On 6 August, the EFL released a statement, saying: “We are clear that the current owner needs either to fund the club to meet its obligations or make good on his commitment to sell to a well-funded party, for fair market value – ending the current uncertainty and impasse.”

On 13 August, the Prohibition Notice was lifted, but a month later, news emerged of a winding-up petition over £1m owed to HMRC.

Read more from Sky News:
Strong gold demand behind surprising rise in retail sales
Most influential black people in the UK named

Last season, Wednesday finished 12th. They had already been placed under registration embargoes in the last two seasons after being hit by a six-point deduction during the 2020/21 campaign, for breaching profit and sustainability rules.

With a 12-point deduction, the Owls would be 15 points away from safety in the Championship.

Continue Reading

Business

Retail sales the highest in three years in a surprise to economists

Published

on

By

Retail sales the highest in three years in a surprise to economists

Retail sales are at the highest level in more than three years, in the latest measure of the UK economy to confound economists.

The amounts bought in shops rose 0.5% in September, far above the 0.2% contraction anticipated by economists polled by Reuters.

It was the fourth monthly rise in a row and brought volumes to their highest level since July 2022.

Money latest: Restaurant sends bitter message to customers

Doing well were computer and telecommunications retailers as the iPhone 17 launched in the month, while online jewellers reported strong demand for gold despite the price hovering around record highs.

Gold has been in demand, and in recent days reached a record high, as some investors moved money out of the US dollar and government bonds amid the ongoing government shutdown.

It came despite a rainy month – which typically keeps shoppers at home – and a five-day tube strike in London.

The impact of the rain could be seen, however, in the boost to online spending, which rose to one of the highest levels since the end of the pandemic.

A fall was recorded in food shop sales from August to September, signalling a response to high food price inflation.

A good week for the economy?

Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.

Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.

Earlier this week, another key economic measure came in better than expected.

Inflation remained at 3.8% rather than rising to the widely expected 4% – double the target rate set by the interest rate-setters at the Bank of England.

Read more from Sky News:
Spotify hikes UK subscription prices
Post Office compensation ‘worse than original injustice’

Consumers were feeling better about their finances, a closely watched measure of consumer confidence showed on Friday.

Buying sentiment is up from last month, according to market research company GFK, as intentions to buy big-ticket items like electrical goods and furniture rose.

Combined, it suggests people are not feeling too gloomy in the run-up to the November budget.

Continue Reading

Trending