Is the UK's 60% "stealth" tax rate for people earning £100-£125k the highest tax in the dev. world

ceivegz

Incredibly, this still gets very little coverage. The erosion of the personal allowance means that there's an effective income tax rate of 60% on earnings between £100K and £125K

There's a good blog article in the Spectator about the 60% rate and how it's basically a back door stealth tax for the "affluent but not necessarily rich". Unlike other thresholds this one's remained at £100K for many years and the increase in the personal allowance means that this rule is HMRC fastest growing earner. Some might say it's fair, but surely it makes more sense for people earning over £150,000 and currently only paying 45% in this bracket instead to go back to paying 50% instead of affluent, professionals (e.g. GPS and even some tube train drivers!) who are by no means super-rich giving MORE THAN HALF of their income to HMRC?

http://blogs.spectator.co.uk/coffeehouse/2013/03/forget-50p-scrap-the-60p-tax-rate/

Dazed_and_confused

No.

Scotland's 61.5% beats this.

anselld

ceivegz wrote: »

giving MORE THAN HALF of their income to HMRC?

... they're not though are they?

Higher marginal rates exist at significantly lower incomes through withdrawal of child benefit. Depending on the number of children this can be 80%+.

Pointless bleating about it though. Given the quoted article is over five years old it seems unlikely to change any time soon.

EdSwippet

Dazed_and_confused wrote: »

Scotland's 61.5% beats this.

63.5% once you add in 2% for employee NI.

Dazed_and_confused

True though as op only referred to tax and not NI then I followed suit

polymaff

Probably not.


It is not even the highest UK rate relative to amount of income being taxed.


That dubious honour goes to those poor s0ds who, even though their total taxable income may be less than £20,000, get taxed at 40%.

dont_use_vistaprint

Its even higher if you have children, you pay higher rate child benefit tax of £1,800 a year for two kids, not to mention a tax of around £5,000 a year per child when they go to university, just for earning a mere £60K. I guess once your earnings reach £100K it makes more sense to pay yourself a small wage and take a dividend, but not always possible if you work for the public sector.

SuperHan

dont_use_vistaprint wrote: »

I guess once your earnings reach £100K it makes more sense to pay yourself a small wage and take a dividend, but not always possible if you work for the public sector.

Also not possible if you're an employee of any sector... Or if you're self employed... Or a partner in a partnership...

dont_use_vistaprint

SuperHan wrote: »

Also not possible if you're an employee of any sector... Or if you're self employed... Or a partner in a partnership...

Its possible , you just have to ask nicely. If you are earning £100K as a self employed person or partner, you re-structure it as Ltd to save tax

Pennywise

dont_use_vistaprint wrote: »

Its possible , you just have to ask nicely. If you are earning £100K as a self employed person or partner, you re-structure it as Ltd to save tax

And in lots of industries, it's pretty usual for the higher paid people to have the option of operating via their own limited company instead of being PAYE as an employee. Though, finally, it's being targetted and law changes are in progress. I think we're finally seeing an end to TV presenters, NHS chiefs etc being paid "off payroll" now.

csgohan4

dont_use_vistaprint wrote: »

Its possible , you just have to ask nicely. If you are earning £100K as a self employed person or partner, you re-structure it as Ltd to save tax

Limited companies no longer are as tax efficient as they used to, unless you got loads of family members willing to be share holders and happy to give you back the dividends you give them, it's not great as it used to.

Dividends are limited to 2k per person before you have to declare tax on them,

Paying yourself an income is the same as being on Paye but worse as your employer used to pay their pension contributions, you as the company will be paying this as well.


Expenses are useful to claim from the company, but unlikely to be significant imo.