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Marginal 40% tax rate payers
Batchy
Posts: 1,632 Forumite
Hi Guys & Girls.
Just a thought, the 40% tax bracket!
Now when I was younger I saw it as a milestone.
You know when you got there, you was sorted.
What I dont understand now, is the government, by freezing the tax bands, has effectively brought many more people into the mix.
Now, whats frustrating, with all these benefits, is when you hit the 40% your going to be paying large amounts of tax, now as well as that you will also hit the cut off for benefits, so what might only be a 500 per annum rise, say 280 after tax, effectively 26 per month ish, you could lose 80 per month ish. On top of that, you are also pushing the boundaries for being able to claim WFTC etc.
Now if you have a flexible employer, he may salary sacrafic, and therefore you get it paid into your pension for a few years etc. with the added benefit of saved employers NI. If you have a non flexible employer, then your stuck. Your effectively worse off.
Also, if your on a final salary scheme and get a rise this year you could be in for a big tax shock if you have built up a few years already and getting a decent 5-10% rise. You could end up with a Tax bill of 10k depending obviously on your earnings.
I thought when the condems said they would make going to work pay, I thought they meant to the worker. Not to the government.
Its Tax Tax Tax... im not impressed to be honest.
What they needed to do was cut the benefits for the non workers, and get them back to work, not tax the workers and make it more off putting going out to work to have very little left at the end of it all. VERY frustrating.
I was feeling done under labour that my unemployed friend could have two free houses guaranteed for life, 3 cars a motor bike a quad, work part time, or more like full time self employed, rent his house out to someone else, and get the money from that and pay for a 10k wedding all on benefits, its just beyond me.
Something needs sorting and it isnt taxing the workers, Housing benefit should be capped at 500 per month and then an additional 25 per month for each child, thats all it needs to be, if you can't live in london for that, then move from london. Simples...
I could go on, but im not going to... very annoyed today!
The reason for voting cons was to put right the mess, not to make it worse. They have really missed the point here.
Just a thought, the 40% tax bracket!
Now when I was younger I saw it as a milestone.
You know when you got there, you was sorted.
What I dont understand now, is the government, by freezing the tax bands, has effectively brought many more people into the mix.
Now, whats frustrating, with all these benefits, is when you hit the 40% your going to be paying large amounts of tax, now as well as that you will also hit the cut off for benefits, so what might only be a 500 per annum rise, say 280 after tax, effectively 26 per month ish, you could lose 80 per month ish. On top of that, you are also pushing the boundaries for being able to claim WFTC etc.
Now if you have a flexible employer, he may salary sacrafic, and therefore you get it paid into your pension for a few years etc. with the added benefit of saved employers NI. If you have a non flexible employer, then your stuck. Your effectively worse off.
Also, if your on a final salary scheme and get a rise this year you could be in for a big tax shock if you have built up a few years already and getting a decent 5-10% rise. You could end up with a Tax bill of 10k depending obviously on your earnings.
I thought when the condems said they would make going to work pay, I thought they meant to the worker. Not to the government.
Its Tax Tax Tax... im not impressed to be honest.
What they needed to do was cut the benefits for the non workers, and get them back to work, not tax the workers and make it more off putting going out to work to have very little left at the end of it all. VERY frustrating.
I was feeling done under labour that my unemployed friend could have two free houses guaranteed for life, 3 cars a motor bike a quad, work part time, or more like full time self employed, rent his house out to someone else, and get the money from that and pay for a 10k wedding all on benefits, its just beyond me.
Something needs sorting and it isnt taxing the workers, Housing benefit should be capped at 500 per month and then an additional 25 per month for each child, thats all it needs to be, if you can't live in london for that, then move from london. Simples...
I could go on, but im not going to... very annoyed today!
The reason for voting cons was to put right the mess, not to make it worse. They have really missed the point here.
Plan
1) Get most competitive Lifetime Mortgage (Done)
2) Make healthy savings, spend wisely (Doing)
3) Ensure healthy pension fund - (Doing)
4) Ensure house is nice, suitable, safe, and located - (Done)
5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)
1) Get most competitive Lifetime Mortgage (Done)
2) Make healthy savings, spend wisely (Doing)
3) Ensure healthy pension fund - (Doing)
4) Ensure house is nice, suitable, safe, and located - (Done)
5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)
0
Comments
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I was feeling done under labour that my unemployed friend could have two free houses guaranteed for life, 3 cars a motor bike a quad, work part time, or more like full time self employed, rent his house out to someone else, and get the money from that and pay for a 10k wedding all on benefits, its just beyond me.
Surely not.0 -
What most higher rate tax payer must learn to realise is that the property/credit boom that many of them will have benefited from, has to be paid for.
Now is payback time.
OK, it may not seem fair (as not all 40% tax payers will own property), but the tax system often isn`t. I`m not in the higher rate tax bracket, but I do pay income tax etc. I didn`t agree with the Iraq war, but I`m paying for it. I don`t want to pay for the bank`s misbehaviour, but I am.
The 300%(ish) rise in property values over the past decade or so has to be paid for somewhere along the line, and in a roundabout way it is now happening.30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
The CB changes are a bit of an anomoly and leave me with a bit of a dilemma, my career target was always to get to a £50k salary by the time I'm 30, but now that child benefit is dropped once you hit £44k, I'd be barely any better off, if at all, earning £50k than £44k. When the time arises (I've got a few years to go in my plan yet) I'd imagine I'll take the long term view and not just stop at £44k, but it is a little bit annoying that if you go just over the threshold you are actually worse off.0
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Will make employers rethink and create perverse incentives.
For example, I take on a salesperson at £25K basic plus OTE. If he/she has kiddies, they are going to put their feet-up just before OTE takes them into 40% band = no sales for me. I'd prefer a salesperson without a family.
Equally, if I have two staff where one has kiddies, a pay increase could make one net worse off if CB is cancelled. I'll need to faff about with other reward schemes and try and persuade them that this is equivalent to the salary increase the other is getting.
What a hassle.0 -
The CB changes are a bit of an anomoly and leave me with a bit of a dilemma, my career target was always to get to a £50k salary by the time I'm 30, but now that child benefit is dropped once you hit £44k, I'd be barely any better off, if at all, earning £50k than £44k. When the time arises (I've got a few years to go in my plan yet) I'd imagine I'll take the long term view and not just stop at £44k, but it is a little bit annoying that if you go just over the threshold you are actually worse off.
I have no idea whether or not you will be financially better off short term. You will however be closer to hitting the next tax band by which ever age target you chose to set for that. Or simply to being better ff with future pay rises should your career not offer scope for the next tax bracket income.0 -
What most higher rate tax payer must learn to realise is that the property/credit boom that many of them will have benefited from, has to be paid for.
Now is payback time.
OK, it may not seem fair (as not all 40% tax payers will own property), but the tax system often isn`t. I`m not in the higher rate tax bracket, but I do pay income tax etc. I didn`t agree with the Iraq war, but I`m paying for it. I don`t want to pay for the bank`s misbehaviour, but I am.
The 300%(ish) rise in property values over the past decade or so has to be paid for somewhere along the line, and in a roundabout way it is now happening.
You can say that again.
So you want me to pay for rising house prices despite the fact that I've been locked out of buying a house?
Not very joined-up thinking...0 -
The CB changes are a bit of an anomoly and leave me with a bit of a dilemma, my career target was always to get to a £50k salary by the time I'm 30, but now that child benefit is dropped once you hit £44k, I'd be barely any better off, if at all, earning £50k than £44k. When the time arises (I've got a few years to go in my plan yet) I'd imagine I'll take the long term view and not just stop at £44k, but it is a little bit annoying that if you go just over the threshold you are actually worse off.
And now you maybe get where I'm coming from - we're a few years older than you, and a 'liitle bit annoyed' - OH worked v hard to get promotion to become a higher rate taxpayer - makes you wonder why...0 -
And now you maybe get where I'm coming from - we're a few years older than you, and a 'liitle bit annoyed' - OH worked v hard to get promotion to become a higher rate taxpayer - makes you wonder why...
I can completely see why you'd be annoyed at having worked hard and then found you may as well have worked a little bit less hard as you aren't really any better off for it, but what I disagree with from your other posts is the idea that anybody in the 40% tax band has a *need* for child benefit.
Theres a couple of complaints about these changes that I think are valid:
1. It targets only the well off, rather than also targeting those lifestyle benefits claimants who abuse the system by having surplus kids because they financially benefit from it.
2. It provides a disincentive to earn a salary just over the 40% tax banding if you have kids for people who don't have a longer term goal to increase their salary even further.
Arguing that households with a 40% tax payer are going to be financially ruined by the change isn't valid IMO.0 -
You can say that again.
So you want me to pay for rising house prices despite the fact that I've been locked out of buying a house?
Not very joined-up thinking...
I dispute you have been locked out of buying a house if your income is in excess of £50k and oh is paying £250 a month to commute.0 -
Just stick the extra £6k into a pension to get yourself below the threshold. Keep paying the excess, above basic rate tax, into a pension until you earn megabucks and the marginal effect of the child benefit loss is small, simples.The CB changes are a bit of an anomoly and leave me with a bit of a dilemma, my career target was always to get to a £50k salary by the time I'm 30, but now that child benefit is dropped once you hit £44k, I'd be barely any better off, if at all, earning £50k than £44k. When the time arises (I've got a few years to go in my plan yet) I'd imagine I'll take the long term view and not just stop at £44k, but it is a little bit annoying that if you go just over the threshold you are actually worse off."The state is the great fiction by which everybody seeks to live at the expense of everybody else." -- Frederic Bastiat, 1848.0
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