40p Tax band - history

[jesusbuiltmycar]

The papers are full of grim news from the Autumn Statement, one of the things they are pointing out is that yet more people are set to become higher rate tax payers as a result of fiscal drag - the 40% tax band threshold is not going to increase in line with inflation.

400,000 more earners pushed on to 40p tax rate

I thought `fiscal drag` has been a favourite revenue raising measure of previous chancellors, and that George Osbourne is just following the same course.

Does anyone have a graph showing how the 40% threshold has changed in the last 20 years?

Edited by jesusbuiltmycar on Thursday 6th December 14:53

[marcosgt]

swerni said:

I thought 50% would now be considered as being "higher rate "

I think that's a reflection on how spoilt you (we) are.

Loads of people would LOVE to earn enough to pay 40% tax... (From the figures I can find online only 29% of taxpayers pay 40% or more - Presumably this doesn't include the super-rich who pay nothing, either).

M.

[markh1973]

swerni said:

I thought 50% would now be considered as being "higher rate "

Official names for the tax rates are Basic, Higher and Additional

[Tartan Pixie]

Hard to see how it can be avoided given how fast the rich / poor divide is growing. If the private sector want to substitute trickle down for pissing on people then they've only got themselves to blame.

We often hear how people at the top are providing employment so deserve their money, however I don't see it. Supermarkets are replacing cashiers with self service tills, trains are becoming self driving and much more, IMO the big boys are more about shedding staff than employing them.

There's not enough jobs and when there are jobs then jobseekers often lack the skills. If the private sector can't put itself to sorting out this problem then it'll be left to the government, who will be inefficient and tax like mad to achieve their aims.

Perhaps if a few companies like Starbucks pooled their resources in to a Princes Trust type organization then less people would be clamoring for HMRC to hound down their profits.

[Eric Mc]

And yet - despite all the perceived job shedding - more people are employed/working in the UK than at any time in its history.

[London424]

anonymous said:

[redacted]

On the flip side of that slightly...there is nothing stopping him contributing extra taxes. The tax laws only state the minimum amount due.

[rover 623gsi]

Eric Mc said:

And yet - despite all the perceived job shedding - more people are employed/working in the UK than at any time in its history.

Which is generally a good thing

However, increasing numbers of positions are part-time. We are moving ever forwards to an hourglass economy, with the ‘middle class’ having to either become very successful or risk losing everything. There are fewer jobs in the middle ranking roles so the mid-point is going to keep falling.

[P-Jay]

Aren't we being constantly told that incomes aren't rising with inflation making the point moot anyway?

I, for one, was surprised by the autumn statement. Everyone, even those on Benefits got a bit more. 1% for them, a few hundred extra allowance for the many and even a few hundred allowance for those on 40% - we can all bleat about it not being inline with inflation, but very little is at the moment - I was expecting a freeze on everything.

[simoid]

marcosgt said:

Loads of people would LOVE to earn enough to pay 40% tax... (From the figures I can find online only 29% of taxpayers pay 40% or more - Presumably this doesn't include the super-rich who pay nothing, either).

M.

I find that hard to believe, have you misunderstood the figure?

I thought we'd have around 30m taxpayers so would be surprised if 9m people earn over £40k or so...

[scenario8]

simoid said:

I find that hard to believe, have you misunderstood the figure?

I thought we'd have around 30m taxpayers so would be surprised if 9m people earn over £40k or so...

It's a little under 4m.

http://www.independent.co.uk/news/uk/home-news/mid...

And it's on its way up.

Edited by scenario8 on Thursday 6th December 13:56

[simoid]

scenario8 said:

simoid said:

I find that hard to believe, have you misunderstood the figure?

I thought we'd have around 30m taxpayers so would be surprised if 9m people earn over £40k or so...

It's a little under 4m.

http://www.independent.co.uk/news/uk/home-news/mid...

And it's on its way up.

Edited by scenario8 on Thursday 6th December 13:56

We've a deficit to balance, apparently.

[durbster]

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

[Honk]

swerni said:

I thought 50% would now be considered as being "higher rate "

Not to mention the 62% rate between 100k and 118k....

[pherlopolus]

Those 400,000 people would have to be right on the cusp of beeing higher rate payers, and then also get a payrise that cancels out not only the increase in personal allowance but also the 1% increase? Or am I missing something?

Edited by pherlopolus on Thursday 6th December 18:29

[cerbfan]

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.

[Eric Mc]

Honk said:

swerni said:

I thought 50% would now be considered as being "higher rate "

Not to mention the 62% rate between 100k and 118k....

That's reffered to as the "You're Screwed" tax rate.

[Ahonen]

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.

Yes, this bemuses me, too.

The quote at the bottom of that Independent article referenced on page 1 beggars belief:

Indy article said:

Rachel Reeves MP, the shadow Chief Secretary to the Treasury, said: “Millions of struggling families on middle and modest incomes are paying the price for this government’s economic failure.”

She added: “How can this government claim we are all in this together when working families, striving to do their best, are being singled out?”

I appreciate it's just a lefty going for a soundbite but Rachel, we're talking about £117 a year. Or one dinner for two in a pub with two bottles of house red. It's a tiny figure. If your finances are that tight that you are budgeting down to the last £2.25 a week of your £43k gross earnings you really should take a careful look at your expenditure. Maybe I'm tight, but I earn only a little more than than and I can honestly say that I wouldn't really notice losing £117 a month, so £117 a year is nothing.

[NorthernBoy]

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

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.

[172ff]

Eric Mc said:

And yet - despite all the perceived job shedding - more people are employed/working in the UK than at any time in its history.

And that is the problem with statistics.. 95% are made up!

[scenario8]

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.

A few years a go my then boss turned down the opportunity for a bit of extra work (about £500) on the basis that he pays "90% of that in tax - it isn't worth it". This man earns around £60-80k a year, has a dozen graduates report to him, is allowed to drive a car and even vote.

He is as much of a cretin now as he was then.