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

Filo25

Certainly a fair incentive to make use of high levels of pension contributions anyway!

michaels

I earn 12.5k, each extra £ I earn gets me 23p, I would be very happy if I could keep 38p.

There is also a cliff edge at about 16k where a single extra £ would result in my losing out on warm home discount energy saving of £140pa, low income household water discount (£200 pa), half price kids music lessons (£700pa) so earn £1 more get 23p and lose out on a bit over £1000 - surely a marginal tax rate of just over 10,000% has got to be about the highest?

I would also warrant that whilst 38p in the £ would make little difference to someone earning over £100k it makes a big difference to those earning just over 10k.

Pennywise

csgohan4 wrote: »

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

But they still need declaring on the tax return you'll have to complete when you earn over £100k. They're not exempt, they're covered by a zero rate tax allowance - a subtle but important difference.

Pennywise

michaels wrote: »

I would also warrant that whilst 38p in the £ would make little difference to someone earning over £100k it makes a big difference to those earning just over 10k.

You may think it makes little difference but it's a negative behaviour driver which can ultimately reduce total tax take. It also has other negative social effects such as doctors and dentists actively reducing their hours to bring their income down to £100k to avoid it, thus worsening the shortage for the NHS.

csgohan4

Pennywise wrote: »

You may think it makes little difference but it's a negative behaviour driver which can ultimately reduce total tax take. It also has other negative social effects such as doctors and dentists actively reducing their hours to bring their income down to £100k to avoid it, thus worsening the shortage for the NHS.

Don't forget the double taxation on pensions:


you get taxed when you put into your pension when you exceed your annual/tapered allowance which is very quick for high earners


you also get taxed for drawing it.


Know plenty of Doctors who are reducing due to the crap zone of 100-120k where your being taxed heavily for a little extra work

kidmugsy

In my lifetime there was a year when some people had to pay a marginal income tax rate of greater than 100%. The Chancellor of the Exchequer who was responsible was Roy Jenkins.

As you might guess the tax rate was imposed retroactively.

michaels

Pennywise wrote: »

You may think it makes little difference but it's a negative behaviour driver which can ultimately reduce total tax take. It also has other negative social effects such as doctors and dentists actively reducing their hours to bring their income down to £100k to avoid it, thus worsening the shortage for the NHS.

I'm not saying it isn't carp nor that it doesn't drive perverse behaviour just that when people are thinking 'woe is me I only get 38p in the £ of any income increase over 100k' there are actually people on massively lower incomes who get much less or even hugely negative amounts from even a small pay rise.

fifer60

I know of a >>100% tax in pensions lifetime allowance.

Pension has a 2 year supplement for first two years - so is £n per year + 2 years supplement £s

Natural mathematical calculation for lifetime allowance pension value is (20 * £n) + (2 * £s) since the supplement is finite in potential value.

But actual calculation is 20 * (£n + £s) since the law is written based upon starting value.

Thus for receiving 2*£s, tax is 55% of 20*£s=11 * £s.

Apparently HMRC are "inflexible" in this crime against numeracy.

So is it a modern slavery or human rights discussion? I will be writing to my MP on this at some point.

russashmore

Is it possible to pay more in to an AVC to lower your taxable income to near or below the 100K mark so your Personal Allowance is protected. Basically you invest the money you would pay in tax into your pension?

Andy_L

ceivegz wrote: »

"affluent but not necessarily rich"

aren't affluent & rich synonyms