40p Tax band - history

Author
Discussion

clockworks

5,292 posts

144 months

Thursday 6th December 2012
quotequote all
I don't think I've ever paid the higher rate tax in the 37 years that I've been on PAYE, despite doing plenty of overtime, etc. I'm now living on an income of about £18k pa. I've got a nice house and 2 cars. I really don't understand all the bleating by people earning £40-odd k plus about losing a few quid on non-means tested benefits and higher rate tax liability. They are the lucky ones, as am I.

The people that I feel for are those who work part time or in low-paid jobs (because that's all they can get), who rely on tax credits and other means-tested top-ups to raise their kids and keep a roof over their heads. Many of these people would be better off on the dole, but they stick with it.

Odie

4,187 posts

181 months

Thursday 6th December 2012
quotequote all
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %

simoid

19,772 posts

157 months

Thursday 6th December 2012
quotequote all
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?

cerbfan

1,159 posts

226 months

Thursday 6th December 2012
quotequote all
simoid said:
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?
I assume he is, that would be fair and save a lot of money and effort at HMRC saving costs. Should be a flat rate across the board including CT and just have a more generous allowance to take more lower earners out of the system.

simoid

19,772 posts

157 months

Thursday 6th December 2012
quotequote all
cerbfan said:
simoid said:
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?
I assume he is, that would be fair and save a lot of money and effort at HMRC saving costs. Should be a flat rate across the board including CT and just have a more generous allowance to take more lower earners out of the system.
I didnt see any mention of allowances in Odie's post...

Would be interesting to see how the maths worked. 4m of the richest in the population would pay less, presumably at least a few of the remaining 26m taxpayers would have to pay more.

Diderot

7,263 posts

191 months

Thursday 6th December 2012
quotequote all
cerbfan said:
simoid said:
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?
I assume he is, that would be fair and save a lot of money and effort at HMRC saving costs. Should be a flat rate across the board including CT and just have a more generous allowance to take more lower earners out of the system.
Given that tax = legalised theft (especially at 40% and beyond), we should all be subject to the same percentage, because er... it's proportional and fair. I'd suggest tax at 15% would be fair (ish).


furtive

4,498 posts

278 months

Thursday 6th December 2012
quotequote all
Paddy_N_Murphy said:
I'm in for that one !
At what rate? If you remove the higher and highest income tax rates and put everyone on a flat rate the only people that will impact negatively are the people that are currently on the standard rate, as the standard rate would have to go up significantly to cover the shortfall of not getting all that extra tax from the people currently paying 40% and 50%.

So you would push the poorest families further into the mire while making the richer richer.

To me that doesn't sound like such a super idea.

London424

12,826 posts

174 months

Thursday 6th December 2012
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anonymous said:
[redacted]
In the US most people (I think) have to submit a tax return every year. From memory, there is a section where you can add more to your tax bill.

All very easy and straightforward. Not sure how it works in the UK.

eccles

13,720 posts

221 months

Thursday 6th December 2012
quotequote all
Ahonen said:
, we're talking about £117 a year. Or one dinner for two in a pub with two bottles of house red.
Jesus, What sort of pubs do you eat in?

anonymous-user

53 months

Thursday 6th December 2012
quotequote all
durbster said:
Is there any reason tax can't be applied on an increasing scale? Why can't the tax equate to, say, 0.5% for every £1k of your taxable income?

Having massive steps of tax seems to be a very blunt solution and is unfair to people around that level of income.

Does it just make it too complicated for accountants, because there's a great invention called the spreadsheet which can do the hard sums smile
dear god

are you allowed to vote?

elster

17,517 posts

209 months

Thursday 6th December 2012
quotequote all
furtive said:
Paddy_N_Murphy said:
I'm in for that one !
At what rate? If you remove the higher and highest income tax rates and put everyone on a flat rate the only people that will impact negatively are the people that are currently on the standard rate, as the standard rate would have to go up significantly to cover the shortfall of not getting all that extra tax from the people currently paying 40% and 50%.

So you would push the poorest families further into the mire while making the richer richer.

To me that doesn't sound like such a super idea.
With a £15k allowance and a 30% flat tax it would cover the entire tax receipts we currently get with a small increase.

BMWBen

4,899 posts

200 months

Thursday 6th December 2012
quotequote all
cerbfan said:
simoid said:
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?
I assume he is, that would be fair and save a lot of money and effort at HMRC saving costs. Should be a flat rate across the board including CT and just have a more generous allowance to take more lower earners out of the system.
That's a very odd definition of fair. And just because you use the same number for everyone doesn't make it any less arbitrary than using completely random numbers.

Allow me...

You earn £0 and you get a £15,000 pay rise - what is that 15,000 worth to you and what effect does it have on your life?

You earn £20,000,000 and you get a £15,000 pay rise - that's a rounding error.

Or to be a little more sensible, what makes more difference to your life, the first 40k of salary or the second? The fact that they're both £40k has nothing to do with their actual *value*.

Ian Geary

4,462 posts

191 months

Thursday 6th December 2012
quotequote all
Whilst the threshold for 40% tax is not increasing as fast, don't forget the personal allowance - the point at which you start paying tax on income - is rising.

If they move together, then the impact is minimised.


A progressive tax system - is one where you pay a higher burden of tax the more you earn (what we're supposed to have)
A regressive tax system - is one where you pay less of a proportion of tax the more you earn (what we actually have at the top end, give the effectiveness of "tax planning")

A flat rate (proportionate) on all income "sounds" nice, and would save a shed load of HMRC work, but the personal allowance and rate would need to be careful thought out. The theory of tax is that if you get the rate "right", you minimise losses of people avoiding / evading.


What I hate is these stupid case studies on TV news, wheeling out some sorry looking Mum saying how difficult everything is. One Mum quit her job to look after her kids, and now her husband lost his job too.

At which point the interviewer should have pointed out the simple answer was for her going back to work again, letting her husband do the childcare. But no, we had to listen to her dribble about why her benefits weren't high enough.


boo-hoo


not





elster

17,517 posts

209 months

Thursday 6th December 2012
quotequote all
Ian Geary said:
A flat rate (proportionate) on all income "sounds" nice, and would save a shed load of HMRC work, but the personal allowance and rate would need to be careful thought out. The theory of tax is that if you get the rate "right", you minimise losses of people avoiding / evading.
The Adam Smith Institute calculated that a 30% flat tax would bring in enough tax receipts to cover the budget, including paying off the deficit, this also included a £15k allowance.

contractor

919 posts

184 months

Thursday 6th December 2012
quotequote all
if we are going to frig about changing the tax system as discussed, lets do away with the con called National Insurance and build that into the new model.


durbster

10,223 posts

221 months

Thursday 6th December 2012
quotequote all
NorthernBoy said:
You seem to be assuming that it works like stamp duty, with the total jumping when you hit the next barrier, but it's not like that. It's only the portion above the threshold that is taxed at the higher rate.
Yeah I understand that but why have fixed steps and not a gradual increase, so every additional £xk earned moves into a slightly higher tax bracket.

Basically my question is: why don't we have more tax brackets with less difference between them? hehe

Johnnytheboy

24,498 posts

185 months

Thursday 6th December 2012
quotequote all
cerbfan said:
But just going into the 40% tax bracket is not a massive loss is it? Just means that the few hundred quid that is above the threshold of 40% instead of the previous rate. I'd swear that a lot of people think that once you go above the threshold you pay 40% on your whole salary the way its bleated on about.
That's one of those things that doesn't get mentioned isn't it? The way it's reported, if you're a few pence into the 40% bracket you pay 40% on the lot.

simoid said:
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?
Why not? Why should higher earners pay a higher percentage? I can't see the moral case for higher earners paying a higher percentage. Do some people not understand the difference between a relative and absolute sum? To quote Parkinson for the 2nd time this week:

"The danger of disproportional taxes was already apparent in that they could be voted by those who would not have to pay them and on a scale to which there was no defined limit".

Democracy and proportinate taxation work very well together - if we all paid the same proportion of our income in tax, we'd all have the same vested interest in keeping public spending down.


2 sMoKiN bArReLs

30,230 posts

234 months

Thursday 6th December 2012
quotequote all
When I were a lad P11D were for directors & higher paid employees. Higher paid was then more than £8500 per year.

That's what inflation does if thresholds aren't moved!! (eventually biggrin)

2 sMoKiN bArReLs

30,230 posts

234 months

Thursday 6th December 2012
quotequote all
..and standard tax was 35%

simoid

19,772 posts

157 months

Thursday 6th December 2012
quotequote all
Johnnytheboy said:
simoid said:
Odie said:
And again someone needs to explain to the chancellor how a percentage works... This countries tax system pisses me off.

Everyone should be on the same income tax %
Serious?
Why not? Why should higher earners pay a higher percentage? I can't see the moral case for higher earners paying a higher percentage. Do some people not understand the difference between a relative and absolute sum?
Really?

Money is worth more to people who have less of it.