40% Tax Liability

opinions4u

The last few budgets have deliberately placed more people in to 40% tax.

lisyloo

but you can't blame that all on tax. if ppl see it as a trade off so much extra money (even after tax) versus extra time and responsibility, then they may think that further money has limited marginal benefit. since they are already very decently paid. (and perhaps they wouldn't have enough time to spend it.)

I agree with you here (and I consider myself a well-off middle income person paying a little HRT).

Some extra money would not be "life changing" even if was £10K or £20K. I already have enough to save, get a pension, take nice holidays and do my hobbies.
So you'd actaully need a "step change" in salary e.g. moving on the board, to actually have a better lifestyle.

Whilst extra money can reduce stress, the extra responsibility can cause stress and health problems, even death, but more likely a poor work/life balance and sub-optimal health.

I'm someone who's chosen not to climb the career ladder and have a better work/life balance. Money isn't everything and I may well actually be more employable a but further down the pyramid. However good you are threre are only so many available CEO positions in the country at any one time.
My husband is higher up the pyramid and has found himself not as employable as he thought and I can tell you that being out of work is very stressful.

CLAPTON

gadgetmind wrote: »

Maybe, but seeing such a large percentage of the total that you've earned (as opposed to been given) disappearing is a major disincentive to putting in the extra.

Twice recently I've had people turn down promotion because they looked at the extra work and responsibility (huge amounts!), looked at the extra money (lots!) and then looked at the extra tax (mind boggling sums!) and decided to take the easy route and say "no".

Our system of taxation is called "progressive". Funny word for a whip with which to lash your hardest workers, but there you go.

the marginal rate of tax on at standard rate is 20+12 = 32 %
the marginal rate on higher band is 40+2 = 42%

significantly more of course but I personally wouldn't call it mind boggling sums

ChopperST

bigadaj wrote: »

If you are employed by the nhs isn't there good employer pension prOvision currently?

Yes there is. The issue is what the scheme will look like in another 50 years when I will eventually be able to draw down the funds. In my 13 year tenure the terms of the scheme have already been altered twice which doesn't fill me with confidence that it wont change again into the future.

lisyloo

but I personally wouldn't call it mind boggling sums

Mathematically you are right but I think it's psycological.
I think of 42% as nearly a half and it seems like a lot.
I fully support the idea of supporting the vulnerable in our society but it just feels like a lot.

You can't blame people like us who would try to legally arrange our finances in a good way.
I wouldn't call it sickening and think that's a poor choice of words.
I count my blessing and it's a great "problem" to have.

To be honest if that's what's you're worrying about you very lucky even in UK terms let alone compared with people in Afghanistan/Syria.

ChopperST

Archi_Bald wrote: »

What is sickening about earning enough to have to pay 40% tax on some of your income? Tens of thousands of people would bite your arm off to have this "problem".

Stop whining, make the best of the lucky situation you have worked to be in. It is entirely in your hands whether you want to pay the 40% on a small part of your earnings, or whether you want to exploit the tax avoidance opportunities that are available to you.

How do I know this is possible? I'll give you one guess.

Please dont take us down that round again Archi Bald. Sickening was a poor choice of words I have already admitted to martinsurrey. However there is nothing "lucky" about my situation. I come from very humble backgrounds and was the first of my family to attend university with the ambition of living a better life than my parents did. I also worked hard during my youth to achieve my goals and get myself a successful career. As such I don't see the tens of thousands of people who would bite my arm off as at all relevant to my original post, I worked hard at school, studied hard at university to gain both a BSc and an MSc in my field and now earn a wage that is recompense for my skills in a labour market.

I know its up to me to exploit the tax avoidance opportunities that are avaliable, hence my reason for posting in the first place!

atush

ChopperST wrote: »

Yes there is. The issue is what the scheme will look like in another 50 years when I will eventually be able to draw down the funds. In my 13 year tenure the terms of the scheme have already been altered twice which doesn't fill me with confidence that it wont change again into the future.

I would not spend a lot of time worrying about this if I were you.

Opening a PP will give you capital and income to use should you wish to retire before your NHS pension is due to start (so you don't hvae to take it actuarially reduced). Saving into S&S isas alongside will boost this.


So increase that pension, and yes an 85% LTV, with an above 4% mtg rate means overpaying alongside is a good idea.

lisyloo

However there is nothing "lucky" about my situation.

On a global scale you've been very lucky to be born in a country where you've had clean water, avoided major diseases, had good free health care and free education.
Your also lucky to be born with enough natural talent to acheive your degrees - not everyone has an equal capability to acheive/earn no matter how hard they work.
You also appear to have enojoyed good enough health to hold down a job for many years which not everyone enjoys.

That doesn't take away from the fact that you've worked hard and made the most of the opportunities available to you and continue to do so.

I don't understand why you don't recognise you've been lucky AND worked hard. I don't get it because there's nothing negative and no guilt attached in my view to being lucky.

TH1878

ChopperST wrote: »

Yes there is. The issue is what the scheme will look like in another 50 years when I will eventually be able to draw down the funds. In my 13 year tenure the terms of the scheme have already been altered twice which doesn't fill me with confidence that it wont change again into the future.

Chopper, if you pay into a personal pension, it has nothing to do with your NHS pension. You can start drawing it from age 55.

Are you fixed into a deal on your mortgage? If you're not, flip it to an offset mortgage and pay any excesses into there.

If you are, pay into a private pension (making sure you reclaim tax relief through self assessment!) until you can change your mortgage.

Failing that, grit your teeth and bend over.

ChopperST

lisyloo wrote: »

On a global scale you've been very lucky to be born in a country where you've had clean water, avoided major diseases, had good free health care and free education.
Your also lucky to be born with enough natural talent to acheive your degrees - not everyone has an equal capability to acheive/earn no matter how hard they work.
You also appear to have enojoyed good enough health to hold down a job for many years which not everyone enjoys.

That doesn't take away from the fact that you've worked hard and made the most of the opportunities available to you and continue to do so.

I don't understand why you don't recognise you've been lucky AND worked hard. I don't get it because there's nothing negative and no guilt attached in my view to being lucky.

Point taken and accepted. I guess my point is I come from a low income single parent family and have worked hard to improve my social strata. Happy to agree that an element of hard work, determination and an element of luck have played their part in me being in my current situation.