Osbourne's tax relief changes in the March budget

EdSwippet

gadgetmind wrote: »

... and some who've "downsized" their jobs as it wasn't worth the stress given that HMRC took so much of the spoils.

Perhaps like many things in life, if you haven't experienced HRT first-hand then it's hard to understand its corrosive effects at the visceral level.

I downsized my job to zero after encountering a 67.52% effective marginal tax rate(*) on what was supposed to be a motivational bonus. There's not a lot of motivation left when the government takes more than 2/3 of something.

(*) Computed thus: 13.8% employer NI, plus 2% employee NI, plus 40% tax on the 86.2% remaining after employer NI, plus 20% personal allowance clawback on the same 86.2%. 13.8 + 2 + .6 * 86.2 = 67.52, leaving me 32.48% net of tax.

gadgetmind

EdSwippet wrote: »

I downsized my job to zero after encountering a 67.52% effective marginal tax rate(*) on what was supposed to be a motivational bonus.

I've had exactly the same tax situation on a bonus. I work my socks off and HMRC are the winners and then send the money off to the whiners.

Sorry, doesn't work for me, I'm backing off and someone else can cover the deficit.

kidmugsy

gadgetmind wrote: »

I know quite a few people who've "semi retired" to take jobs as A-level maths teachers and they all seem happier for it.

Long ago I enquired about taking an early retirement package with a view to training as a tax inspector. Alas my immediate boss wouldn't let me go. Pity: bumping along on half pay plus an inspector's pay rather appealed.

Are HMRC still so desperate for people that they'll train folks in their fifties?

C_Mababejive

I ensure that i am just below the higher earnings bracket. I am surely not going to work for half pay.how ridiculous is that ? hahaaaaaa

kidmugsy

You've misunderstood. Half pay as a pension, plus full pay as a tax inspector trainee, would have left me better off. And a lump sum too. Trebles all round!

AlanP_2

I know that none of us want to pay more tax than we have to, just look at a lot of the threads and discussions on here, I'm no different and have been a HR taxpayer in the past.

I also had a higher take home amount then as well so was better off and that is what I can't understand when people complain.

If you earn more, you pay more tax but unless it is at a rate of 100% then you are better off.

Whether the individual thinks the reward exceeds the effort is a personal choice, but once you've made it (carried on working for that higher salary), then end of as far as I am concerned.

gadgetmind

AlanP wrote: »

Whether the individual thinks the reward exceeds the effort is a personal choice

Yes, and it's this other side of the equation that people forget, and how mobile our workforce is nowadays.

And as for "end of it", sorry, but we all have the right to observe that taxation in the UK is unsustainably high and most likely at the "higher taxes = lower take" part of the Laffer Curve.

For instance, I expect that the lowering of CGT rates in the budget will cause a massive rise in the amount of CGT that HMRC collects over coming years.

michaels

gadgetmind wrote: »

I've had exactly the same tax situation on a bonus. I work my socks off and HMRC are the winners and then send the money off to the whiners.

Sorry, doesn't work for me, I'm backing off and someone else can cover the deficit.

After the financial crash I ended up working one day a week due to work drying up and receiving tax credits so clearly I was one of the whiners. At that point I did some extra work on the census as a data gatherer (seemed worthwhile as I often use census data in the day job) which I did despite facing a marginal effective tax rate of 95%.

All those who can't see why they should work for only 35% of their income after tax might want to think of the much larger number of people who suffer marginal rates in the 90s percent.

This work on the census paid about £10 per hour (yes really there are lots of jobs that only pay that much or less) so I was left with 50p an hour - shall we compare that to the £16ph someone on 100k taxed at 65% gets for working an extra hour?

gadgetmind

michaels wrote: »

After the financial crash I ended up working one day a week due to work drying up and receiving tax credits so clearly I was one of the whiners.

Dunno, did you whine that you weren't getting enough free money?

I doubt it, and instead think that you used the welfare system as a safety net while you plotted a new career trajectory, which is what it's for. What it isn't supposed to be is a big fluffy comfort blanket that people wrap themselves in for decades while not making any attempt to align their skills with what employers want.

This work on the census paid about £10 per hour (yes really there are lots of jobs that only pay that much or less) so I was left with 50p an hour - shall we compare that to the £16ph someone on 100k taxed at 65% gets for working an extra hour?

If you like. But remember that when working out your tax rate, you have to account for the tax credits, so your overall level of taxation was probably a negative percentage. Someone on a negative rate of tax can barely complain when it becomes slightly less negative!

As for £10 per hour, my wife can only dream of this as she's currently on about £7.

saver861

AlanP wrote: »

Whether the individual thinks the reward exceeds the effort is a personal choice, but once you've made it (carried on working for that higher salary), then end of as far as I am concerned.

That would be correct.

There is always someone on the way up wanting to make their bosses desk their own. So, when money becomes the primary motivation then maybe it is time for the young and hungry to move up.

If I was having brain surgery, I'd like to think the surgeon's primary motivation did not centre solely on money and his tax rate!!