Thursday, 25 April 2013

# 56 (2013) Paying Your Way

The expectation that everyone should ‘know their place’ financially may seem absurd but you may have noticed more and more how anyone ‘getting by’ who isn’t the elite in this country is being penalised for it to apparently help reboost our economy. How taking tax paying shoppers off the high street is helping I have no idea.

High tax rates mean that if you are in a low income job, remaining under your personal allowance is imperative if you are to make it worth your while and, crucially, be able to survive off it. Out of the £234 a week I’m currently earning on a six week contract I shell out £47 of it PER WEEK to the tax man and another £10.60 for National Insurance. This, despite not being over my personal allowance. It’s a complicated situation.  

Thankfully I know how to work the system and will be putting in my claim for reimbursement as soon as this contract is over because that tax will amount to more than a week’s pay by the time I’m done and I want it back.

If I was doing this job full time, I would be about £2700 over the personal allowance at the end of the year but after paying tax and NI’s would be back under it by about £250 thus putting me straight back into financially difficult circumstances. To put that into perspective, after paying out for rent, regular bills and a very basic food allowance I’d have about £180 left in ‘spending money’ per month which I essentially put aside for emergencies.

There have recently been calls for pensioners on higher pensions to pay more tax. People who spent their working years carefully saving in boom time to make sure they didn’t have to struggle in their doting years may be put right back with the rest of us on low incomes. Personally I don’t think that’s fair. Pensions seem to have become a bottomless raiding pit for the Government and there seems to be no way to stop them.

Benefits have been slashed for many, often vulnerable recipients. Councils are still having their budgets cut, which it seems only affects the people on the ground who really need the services, hard working, low income, vulnerable people.

And yet still the elite, the politicians and the high flyers seem to be immune. Are they really untouchable or has our Government really not got the balls to make the changes where they really need to be made and where they may have a real effect on the current situation. The reality is that the 200 richest in the UK could dig this country out of debt.

The system has been set up to be abused. Certain changes do address some of these problems such as benefit claimants finding it more lucrative to remain on benefit rather than being in work. I haven’t claimed any benefit since I was 18 and then it was only for a few months, but looking at the figures I would be little worse off signing on than working so I’m not surprised people are working the system. But it seems the obvious targets are being sidelined, no doubt because of precious votes and political influence. I know politicians, I know how it works and how fickle these people can be. It’s all about feathering ‘one’s own nest’.

If anything, doing this 6 week contract has taught me that I need to be careful about remaining inside my personal allowance and not ‘over working’. I am running my own business but things are tough right now and I am doing a juggling act between honouring my business commitments when they are there and doing temp contracts to keep enough coming in to pay my bills. The system is workable, but you need to keep an eye on the details and know what your limits are. 

Certainly I have found no incentive to go back into work full time and that’s worrying for someone like me who always had a strong work ethic.

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