Listen to the Taxman

Debt_Free_Chick

Is the calculator correct, for gross income above £100,000?

It doesn't seem to take account of the tapering away of the personal allowance. The basic rate (20%) tax for an income of £120k is the same as that for an income of £100k, whereas by my calculation the higher earner should be paying an additional £1295 pa in the 20% tax band (i.e. 20% of 6,475 as there is no entitlement to a personal allowance, once income exceeds £112,950).

Could someone take a look and confirm please - or tell me I've finally lost it

suso

the 20% proprtion is the same regardless of whether they have a personal allowance,

ie the first 37,400 of taxable income is taxed at 20%, then the next 112,600 is taxed at 40% and anything above that is taxed at 50%

jem16

Debt_Free_Chick wrote: »

Is the calculator correct, for gross income above £100,000?

It seems to work ok for me.

Income of £100,000 shows tax-free allowances of £6475.
Income of £120,000 shows tax-free allowances of £0
Income of £110,000 shows tax-free allowances of £1475
Income of £105,000 shows tax-free allowances of £3975

It doesn't seem to take account of the tapering away of the personal allowance. The basic rate (20%) tax for an income of £120k is the same as that for an income of £100k, whereas by my calculation the higher earner should be paying an additional £1295 pa in the 20% tax band (i.e. 20% of 6,475 as there is no entitlement to a personal allowance, once income exceeds £112,950).

The difference doesn't lie in the 20% tax band as suso pointed out. The difference will lie in the 40% or 50% band as more of the income will be pushed into those bands.

i.e. for £100k 40% tax is £22,450 and for £120k 40% tax is £33,040.

For the £100k earner 40% tax starts at £6475 + £37,400 = £43,875
For the £120k earner 40% tax starts at £0 + £37,400 = £37,400

John_Pierpoint

Another clever deception to give the impression that tax rates have not gone up as much as they really have.
I suppose that if you income is over 100K you should be clever enough to notice that??

Debt_Free_Chick

John_Pierpoint wrote: »

Another clever deception to give the impression that tax rates have not gone up as much as they really have.
I suppose that if you income is over 100K you should be clever enough to notice that??

My income is not over and nowhere near £100k

John_Pierpoint

We can dream

property.advert

jem16 wrote: »

It seems to work ok for me.

For the £100k earner 40% tax starts at £6475 + £37,400 = £43,875
For the £120k earner 40% tax starts at £0 + £37,400 = £37,400

My quick look at this seems to indicate they have created a "black hole" akin to the £250k to £270k void which exist in stamp duty on property purchases. Once your salary hits £100k your marginal rate rises dramatically and you sort of need a jump to £120k. Great forward thinking that is by those with gold plated index linked pensions.

I know, people who get six figure salaries are lucky in many ways but the reality is that £100k is not that much when considering a family and your requirements. Certainly on 100k I would not consider myself wealthy. The only "good" thing the 40% pension tax relief but that may well go, again a decision which does not affect those in the ivory (sic) tower with defined benefit pensions.

Debt_Free_Chick

property.advert wrote: »

My quick look at this seems to indicate they have created a "black hole" akin to the £250k to £270k void which exist in stamp duty on property purchases. Once your salary hits £100k your marginal rate rises dramatically and you sort of need a jump to £120k. Great forward thinking that is by those with gold plated index linked pensions.

I know, people who get six figure salaries are lucky in many ways but the reality is that £100k is not that much when considering a family and your requirements. Certainly on 100k I would not consider myself wealthy. The only "good" thing the 40% pension tax relief but that may well go, again a decision which does not affect those in the ivory (sic) tower with defined benefit pensions.

It affects those with income over £130/150k massively though, as they will be paying tax on the value of their DB pension increase. So they'll be paying tax now on income (pension) they've not received and may not live to receive! The tax on pension accrual is vindictive and goes against the grain by taxing a benefit not yet received (unlike the company car benefit, medical insurance provided by your employer etc).

Debt_Free_Chick

suso wrote: »

the 20% proprtion is the same regardless of whether they have a personal allowance,

ie the first 37,400 of taxable income is taxed at 20%, then the next 112,600 is taxed at 40% and anything above that is taxed at 50%

:doh:Doh! I am a numpty

Thanks

dzug1

property.advert wrote: »

. The only "good" thing the 40% pension tax relief but that may well go, again a decision which does not affect those in the ivory (sic) tower with defined benefit pensions.

Yes it does.

Those defined benefit schemes are not non-contributory. That went out years ago.

Debt_Free_Chick

dzug1 wrote: »

Yes it does.

Those defined benefit schemes are not non-contributory. That went out years ago.

But it's a tax on the annual pension accrual, not on the contributions going in.

Take someone aged 45 with a 1/60th pension and a salary of £150k. Let's say they have no increase in salary. Over one year, they'll earn an extra 1/60 of salary, which is £2,500.

under Labour's new tax proposals, they'll pay tax of (approx) £15k. Not via PAYE, but as a lump sum via self assessment. Yet they won't see the benefit of that pension for another 20 years .... if they live that long. Shocking. I can't think of any other tax which is a "tax on the future". Shocking.