Half a MILLION caught in the 60% tax trap by earning £100k
Discussion
This is probably a popular tax as it hits mostly the fortunate and successful living in the south east.
I wonder how popular it’d be if the tax was pro-rated to other parts of the country based on living costs. Say, 90k in Greater Manchester and 60k in the rural parts of the country.
I wonder how popular it’d be if the tax was pro-rated to other parts of the country based on living costs. Say, 90k in Greater Manchester and 60k in the rural parts of the country.
I'm in the fortunate position of being able to set my own salary level, which is just under £100,000, specifically to keep myself out of the 60% trap.
If the 40% rate remained above £100,000, then I could happily take more salary, with more tax revenue going to the exchequer. However, under the current system, the taxman loses out on additional income because the tax rate is unreasonably high.
The Laffer curve in action.
If the 40% rate remained above £100,000, then I could happily take more salary, with more tax revenue going to the exchequer. However, under the current system, the taxman loses out on additional income because the tax rate is unreasonably high.
The Laffer curve in action.
I agree… forever taxing and not seeing improvements it’s hard to swallow. Unfortunately the UK is in the worst situation of going high tax but still poor services. I prefer an economy that encourages you to work more because you reap your rewards from that work. Not one were you work more just to make ends meet.
You can argue some countries have higher tax rates but normally comes along with a more homogenous society, some oil revenue and higher wages… we are having the worst of both worlds.
You can argue some countries have higher tax rates but normally comes along with a more homogenous society, some oil revenue and higher wages… we are having the worst of both worlds.
ChocolateFrog said:
I think I'd have to really squeeze hard to shed a tear for those earning over 100k.
You should. A lot of my colleagues and myself, often go over the £100k mark. Mostly through overtime, weekend, emergencies and standby's. Working 7 days a week for 80% of the year; yes this tax pisses me off no end.Worth bearing in mind though that if you or a member of your family ever need surgery to save your life, the person performing it will probably be in this bracket based on the study and experience they’ve invested in themselves over the years to be in that position.
The fact the tax levels out again higher up the wage curve seems bonkers….
The fact the tax levels out again higher up the wage curve seems bonkers….
CrgT16 said:
That bracket does not attack rich, not even close. Instead attacks the aspiring and the ones that perhaps tried extra hard to better themselves. The really rich you can’t touch them.
Totally agree.It also attacks persons like me, who in addition to what you say, used their past earnings wisely to invest in their future retirement through pensions and savings methods, then retire and pay higher rate tax for being so self sufficient. I've been retired 20 years, now pay 26% income tax on every £1 that I accrue through pensions and savings interest etc, and I am very likely to be required to pay more, much more. Increasingly, governments have have taken away incentives for individuals to save and be more self funding for their future, big mistake IMO.
R.
for those caught in this tax grab, it is not surprising they feel resentment towards those clamouring for higher taxes on the 'rich' especially as those are often only contributing a fraction of the highest earners.
Perhaps it would be best to just do away with the personal allowance for everyone, so that all are able to participate in contributing income taxes - it would certainly be fairer.
Perhaps it would be best to just do away with the personal allowance for everyone, so that all are able to participate in contributing income taxes - it would certainly be fairer.
ChocolateFrog said:
I think I'd have to really squeeze hard to shed a tear for those earning over 100k.
You should be in favour of such people, because they pay a substantial amount of tax compared to those that moan and do not. If these higher tax payers did not exist, all lower paid will need to pay a lot more tax than they do currently. The point, really, is how much more can these persons be squeezed for yet more tax before they head off elsewhere, and where does all the tax go; who are the real beneficiaries?R
The lunacy is that, in London, the people falling into this will include primary school head teachers, EA/PAs, mid-ranking professionals, plumbers, electricians, bricklayers etc. Many will either be dis-incentivised from driving up their personal productivity to keep below this threshold or incentivised to look for models of employment that minimise or eliminate income tax. In either case, the Excequer is the lower.
We really need the Tories to make personal choice & freedom - including keeping more of the money you earn - a central pillar of their renewal. If that means we have to spend less, then so be it. Our national hazard is that this is rapidly becoming unsayable.
We really need the Tories to make personal choice & freedom - including keeping more of the money you earn - a central pillar of their renewal. If that means we have to spend less, then so be it. Our national hazard is that this is rapidly becoming unsayable.
It’s also a sign of how the UK has become accustomed to low wages. £100k a year should not be seen as an especially large amount of money; in the US $130k/year puts you at about the 75th percentile.
In the US perceptions are just so different - for a rough idea the conceptions of a “high salary” is roughly 2x (in dollars) what we think of in £. So a $100k salary would be seen in the same light as we think of £50k, and $200k salary as we think of £100k.
(And anecdotally it tallies - US salary scales in my company aren’t far away from that, and a US member of congress gets paid $174k where UK MPs get about £90k)
In the US perceptions are just so different - for a rough idea the conceptions of a “high salary” is roughly 2x (in dollars) what we think of in £. So a $100k salary would be seen in the same light as we think of £50k, and $200k salary as we think of £100k.
(And anecdotally it tallies - US salary scales in my company aren’t far away from that, and a US member of congress gets paid $174k where UK MPs get about £90k)
brickwall said:
It’s also a sign of how the UK has become accustomed to low wages. £100k a year should not be seen as an especially large amount of money; in the US $130k/year puts you at about the 75th percentile.
In the US perceptions are just so different - for a rough idea the conceptions of a “high salary” is roughly 2x (in dollars) what we think of in £. So a $100k salary would be seen in the same light as we think of £50k, and $200k salary as we think of £100k.
(And anecdotally it tallies - US salary scales in my company aren’t far away from that, and a US member of congress gets paid $174k where UK MPs get about £90k)
Part of that is because, in the US, the state gives much greater discretion to buy - or not buy - what we term social services to the individual. Here, we are taxed at source so that the state can provide thise services - often badly &/or inefficiently - whether we want or need them or not.In the US perceptions are just so different - for a rough idea the conceptions of a “high salary” is roughly 2x (in dollars) what we think of in £. So a $100k salary would be seen in the same light as we think of £50k, and $200k salary as we think of £100k.
(And anecdotally it tallies - US salary scales in my company aren’t far away from that, and a US member of congress gets paid $174k where UK MPs get about £90k)
I’d be very surprised if most people in the £100k-£140k tax band aren’t salary sacrificing into their pensions to get below £100k. Presumably HMRC, and those keeping track of these things, only see the post-salary sacrifice numbers and therefore the number of people earning over £100k is much higher? Or do they see the pre-salary sacrifice figures?
I think I get it, boo hiss to anyone "doing well" also know as working hard.
TX.Exactly this. I’m taking a good few weeks of unpaid leave this year because I just can’t be arsed working for the amount of money I’d get in return.
Tax me less and I’d work more and contribute less to my pension. I’d then pay more tax and spend more on shiny things, so even more tax for the government.
Terminator X said:
ChocolateFrog said:
I think I'd have to really squeeze hard to shed a tear for those earning over 100k.
You don't understand that the Govt would likely get more tax by removing it?I think I get it, boo hiss to anyone "doing well" also know as working hard.
TX.
Tax me less and I’d work more and contribute less to my pension. I’d then pay more tax and spend more on shiny things, so even more tax for the government.
Douglas Quaid said:
Sadly I’m not in that half million although I know the rest of pistonheads will pretend to be via the use of subtle humblebrags.
FTFY 
It's a stupid clickbait headline (and I see Welshbeef hasn't lost his somewhat perverse fascination of people making "six figs").
Firstly it's a marginal rate of tax. You're not paying it on all, or even most of your salary. The average state deductions that most people pay is somewhere between 37% and 45%. The second thing is that it's relatively easy to mitigate (so it's a pretty poor "trap"). Thirdly, at that level , you have far more discretionary income than somebody on 30k-40k so it makes sense for the Govt to charge more tax on somebody earning at that level.
For people supposedly on £100k plus I'm not sure if it's just pretending to fit in on PH or if they're really crap at budgeting. It's £5500 net.
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