Discussion
It's not actually a 60% tax rate but the result of 40% tax and the loss of the personal allowance once income exceeds £100,000, the personal allowance is lost at a rate of £1 for every £2 income exceeds £100K. So in effect income between £100K and £125,140 results in a tax rate of 60%.
Not fair at all when you consider that lots of the uber wealthy and many of the largest companies trading in the UK pay tax at a much, much lower rate.
Not fair at all when you consider that lots of the uber wealthy and many of the largest companies trading in the UK pay tax at a much, much lower rate.
Racehorse said:
Having a chat with a friend who is considering moving abroad due to high tax rates here.
Got me thinking, is it actually appropriate to be taxed at 60% if you earn more than 100k pa
Surely such high tax rates should be for those who earn millions. Why has it actually been set at 100k?
If you're mitigating this, you're also maxing out pensions contributions at what was £40k and is now £60k. Got me thinking, is it actually appropriate to be taxed at 60% if you earn more than 100k pa
Surely such high tax rates should be for those who earn millions. Why has it actually been set at 100k?
But I agree, it's a disincentive to work harder. Fiscal drag means that increasingly more people are caught out by this.
It's almost certainly a vote winner, and changing the limit or removing the problem would be seen as concessions for 'the rich'.
ETA: I wonder if people who are affected by this and on PAYE are even aware of the impact.
Enut said:
It's not actually a 60% tax rate but the result of 40% tax and the loss of the personal allowance once income exceeds £100,000, the personal allowance is lost at a rate of £1 for every £2 income exceeds £100K. So in effect income between £100K and £125,140 results in a tax rate of 60%.
Not fair at all when you consider that lots of the uber wealthy and many of the largest companies trading in the UK pay tax at a much, much lower rate.
but why set this at 100k? Not fair at all when you consider that lots of the uber wealthy and many of the largest companies trading in the UK pay tax at a much, much lower rate.
large companies have corporation tax right?
From https://ifs.org.uk/publications/reforms-roll-outs-...
theinternet said:
The point at which the personal allowance begins to be tapered away (£100,000) and the additional-rate threshold (£150,000) have both been frozen since their introduction in 2010. By 2025–26, 3% of adults (1.6 million) will have some of their personal allowance withdrawn, and 1.4% (760,000) will pay additional-rate tax – in both cases around triple the equivalent number in 2010 when the thresholds were created.
The website also cites a value of £129k if the limit had been pegged to CPI.Edited by Chris Type R on Saturday 8th July 13:21
We are still quite low tax in the UK. The problem is that we want American levels of tax but then have European levels of public services.
The only way to square that circle is be more productive than other countries, but without serious investment in education and innovation that’s not going to happen. Leaving the world’s richest free trade area won’t helped much whether…
The only way to square that circle is be more productive than other countries, but without serious investment in education and innovation that’s not going to happen. Leaving the world’s richest free trade area won’t helped much whether…
Chris Type R said:
If you're mitigating this, you're also maxing out pensions contributions at what was £40k and is now £60k.
But I agree, it's a disincentive to work harder. Fiscal drag means that increasingly more people are caught out by this.
It's almost certainly a vote winner, and changing the limit or removing the problem would be seen as concessions for 'the rich'.
ETA: I wonder if people who are affected by this and on PAYE are even aware of the impact.
You have to submit a Self-Assessment tax return when you earn over 100k (even if you are PAYE) so if they aren't aware of it now, they will be in about a year's timeBut I agree, it's a disincentive to work harder. Fiscal drag means that increasingly more people are caught out by this.
It's almost certainly a vote winner, and changing the limit or removing the problem would be seen as concessions for 'the rich'.
ETA: I wonder if people who are affected by this and on PAYE are even aware of the impact.
67Dino said:
We are still quite low tax in the UK.
33%.That must include a lot of people paying little or no tax, because income tax is 20 or 40% and VAT is another 20% on almost everything, so that's 40 and 60% straightaway (excluding allowances) before you add fuel duty, IPT and all the other bits.
Simpo Two said:
67Dino said:
We are still quite low tax in the UK.
33%.That must include a lot of people paying little or no tax, because income tax is 20 or 40% and VAT is another 20% on almost everything, so that's 40 and 60% straightaway (excluding allowances) before you add fuel duty, IPT and all the other bits.
67Dino said:
We are still quite low tax in the UK. The problem is that we want American levels of tax but then have European levels of public services.
Smoke and mirrors.When I pay my hefty UK taxes what I care about is the actual % tax I pay - I couldn't give a toss about "total tax take as a % of GDP".
UK has truly massive real taxation, there's no denying it. Both direct taxes and indirect taxes.
Don't forget your 20% VAT, Council Tax, Fuel Tax, Booze Tax, Airport tax and all the rest are paid out of income that's ALREADY been taxed!
If you're in that 60% band and buy, say, a new car subject to 20% VAT (and hefty road tax) your effective overall tax is at least 70% !!!
Racehorse said:
is it not also another problem that if you earn 100k, you do not get child benefit?
£60k, and just to add to the fun, if you earn between £50 and 60k, you get paid it in full & then get a bill for the amount you shouldn’t have had after you’ve filled in a self-assessment. Over £60k and you can either take part in the nonsense above or opt for a zero payment claim.If you’re in Scotland, btw, the tax rates go from marginally below rUK rates up to about £25k, then once you pass 43k it’s 41, soon to be 42% tax + 12%NI, then when you hit £50k you’re into the child benefit mess above, so you’re basically on 53%+ tax all the way from £43-60k.
LooneyTunes said:
Chris Type R said:
But I agree, it's a disincentive to work harder.
Why? You’re still better off by earning more.Tax has two proposes, to raise revenue and to change behaviours. Unfortunately they are not mutually exclusive. If you raise taxes on high earners to raise revenue, it's a disincentive for people to do the sort of work that pays more.
I retired rather than pay extra taxes under IR35. There wasn't enough incentive to work any more. Other people may work less, or do less depending jobs.
As another example when I was low paid but got paid overtime, I kept it under the high rate threshold. It wasn't worth working anymore hours for a smaller hourly rate.
LooneyTunes said:
Chris Type R said:
But I agree, it's a disincentive to work harder.
Why? You’re still better off by earning more.If you need to employ capital or have this at real risk, then the risk/reward ratio could make this unattractive. in my company, my marginal rate (corp+dov tax) means 55% tax. Given my business is high capital and not without risk, it's not attractive to employ risk money and earn only 45% of it.
That's before...
1) VAT on anything you buy with the remaining 45%
2) IHT liability if you don't spend it
Panamax said:
Smoke and mirrors.
When I pay my hefty UK taxes what I care about is the actual % tax I pay - I couldn't give a toss about "total tax take as a % of GDP".
UK has truly massive real taxation, there's no denying it. Both direct taxes and indirect taxes.
Don't forget your 20% VAT, Council Tax, Fuel Tax, Booze Tax, Airport tax and all the rest are paid out of income that's ALREADY been taxed!
If you're in that 60% band and buy, say, a new car subject to 20% VAT (and hefty road tax) your effective overall tax is at least 70% !!!
agreed!When I pay my hefty UK taxes what I care about is the actual % tax I pay - I couldn't give a toss about "total tax take as a % of GDP".
UK has truly massive real taxation, there's no denying it. Both direct taxes and indirect taxes.
Don't forget your 20% VAT, Council Tax, Fuel Tax, Booze Tax, Airport tax and all the rest are paid out of income that's ALREADY been taxed!
If you're in that 60% band and buy, say, a new car subject to 20% VAT (and hefty road tax) your effective overall tax is at least 70% !!!
is there a list of how much tax each country charges?
alangla said:
£60k, and just to add to the fun, if you earn between £50 and 60k, you get paid it in full & then get a bill for the amount you shouldn’t have had after you’ve filled in a self-assessment. Over £60k and you can either take part in the nonsense above or opt for a zero payment claim.
If you’re in Scotland, btw, the tax rates go from marginally below rUK rates up to about £25k, then once you pass 43k it’s 41, soon to be 42% tax + 12%NI, then when you hit £50k you’re into the child benefit mess above, so you’re basically on 53%+ tax all the way from £43-60k.
so anyone who earns 60k is not allowed child benefit??If you’re in Scotland, btw, the tax rates go from marginally below rUK rates up to about £25k, then once you pass 43k it’s 41, soon to be 42% tax + 12%NI, then when you hit £50k you’re into the child benefit mess above, so you’re basically on 53%+ tax all the way from £43-60k.
I thought recent budget changed this???
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