Tax on bonuses above £120k

Darksparkle

grey_gym_sock wrote: »

sorry to extend the off-topic discussion, but i think it's worth adding that (IMHO) the best way to reduce complexity and eliminate all the clawbacks (which lead to effective marginal rates seesawing up and down as your income rises) is a basic income.

that means: pay everybody - initially, let's consider ppl aged 25+ but under state pension age - a basic income of £X per week. this is unconditional, tax-free, and never clawed back. it replaces all of:
1) JSA, income support, etc, for ppl out of work;
2) most kinds of tax credits, for ppl in work;
3) the personal allowance - i.e. instead of getting your first £10k+ of earnings free of income tax, you'd get a basic income whether or not you have earnings, but you'd start paying tax on your first £ of earnings (or maybe there'd be a much smaller personal allowance) - but no clawback in additional to tax. (the basic income would be worth a similar amount to having a personal allowance.)

the actual tax rates on income would rise as income rises. that doesn't mean you'd be paying less overall on £100k - you might be paying more - but at least the rates would be more logical, and the system easier to understand and administer. ppl with low earnings would gain, because the lowest income tax rates would be less than the current clawbacks of tax credits.

child benefit would be made universal and tax-free again; and it also would be increased, with the increase replacing child tax credits, which would also be abolished, eliminating another clawback.

under-25s would perhaps get a lower basic income than over-25s, reflecting the currently lower benefits which they get.

over SPA, there would be a significantly higher basic income, replacing both state pension and pension credits.

various kinds of disability benefits would still exist, as top-ups to basic income.

housing benefit is tricky. it might need to stay as it is. ideally, you'd pay a high enough basic income that housing benefit became unnecessary, at least except in high-rent areas.

Always wondered why the age of 25 is used. I needed the same amount of income when I was 24 as I did when 25.

kevshed

ChuckMountain wrote: »

I personally don't think the additional burden is fair and was something that was introduced in the dying days of the Labour government, but equally the Tories have not scrapped it yet because as you can imagine it generates a reasonable amount of tax income. There are according to National Statistics nearly 700,000 people earning over £100k and 300,000 earning over £150k so thats roughly an additional £3 billion in tax.

Its one thing paying a higher rate tax but when more money goes to the government than an individual takes home it sucks

I'm sadly caught in this trap, and keep writing to Osborne on the topic... I'm the sole earner in my family yet get no allowance of assistance of any kind (Granted i shouldn't need any) - but in terms fairness... my neighbours - who both work, between them earn more than me... but still keep their £20k+ of allowance..... Hardly a 'social or family friendly' tax system.

Rant over

To the original poster... I had the same challenge in year 1 of earning in this bracket.. as replies say - in year 2, they assume (unless you give them reason not to) that you will earn the same over the year... so accuracy gets better over time. What i did, was make an assumption on the salary calculator of the high end, and bank the difference between PAYE and that calculation. I always had more than needed to cover the tax.