60% effective tax band-advice needed 12 November 2022 at 12:05PM in Cutting tax 41 replies 1.6K views

purdyoaten2

Grumpy_chap said:

Maybe the 45% won't start until £125,141?

Well done! 👍

Grumpy_chap

purdyoaten2 said:

Grumpy_chap said:

Maybe the 45% won't start until £125,141?

Maybe - but you’re presuming that they have noticed!

Seems like Jeremy Hunt did notice.

purdyoaten2

Grumpy_chap said:

purdyoaten2 said:

Grumpy_chap said:

Maybe the 45% won't start until £125,141?

Maybe - but you’re presuming that they have noticed!

Seems like Jeremy Hunt did notice.

Our posts crossed!

Jeremy535897

The 45% rate starts at £125,140 from 6 April 2023, which deals with the trivial issue raised earlier about income between £125,000 and £125,140. With inflation around 25% over a 2 year period, the reality of this measure is that it will bite at incomes equivalent to £100,000 just a year ago.

Given the dedication with which people work (or in some cases reduce work) to avoid these higher rates, my prediction that all this measure will do is reduce productivity further and yield very little, if anything, extra.

purdyoaten2

Jeremy535897 said:

The 45% rate starts at £125,140 from 6 April 2023, which deals with the trivial issue raised earlier about income between £125,000 and £125,140. With inflation around 25% over a 2 year period, the reality of this measure is that it will bite at incomes equivalent to £100,000 just a year ago.

Given the dedication with which people work (or in some cases reduce work) to avoid these higher rates, my prediction that all this measure will do is reduce productivity further and yield very little, if anything, extra.

Couldn’t agree more. Slightly surprised that pension relief was not restricted in some way. Perhaps a step to far!

Grumpy_chap

Jeremy535897 said:

Given the dedication with which people work (or in some cases reduce work) to avoid these higher rates, my prediction that all this measure will do is reduce productivity further and yield very little, if anything, extra.

So far as I can tell, it is not the 45% rate that is the driver for avoiding behaviours but the withdrawal of the personal allowance.

Exodi

purdyoaten2 said:

Jeremy535897 said:

The 45% rate starts at £125,140 from 6 April 2023, which deals with the trivial issue raised earlier about income between £125,000 and £125,140. With inflation around 25% over a 2 year period, the reality of this measure is that it will bite at incomes equivalent to £100,000 just a year ago.

Given the dedication with which people work (or in some cases reduce work) to avoid these higher rates, my prediction that all this measure will do is reduce productivity further and yield very little, if anything, extra.

Couldn’t agree more. Slightly surprised that pension relief was not restricted in some way. Perhaps a step to far!

Don't give them ideas...

On-the-coast

is the personal allowance still withdrawn from 100k? so we still have the 60% marginal rate from 100k through to 125k..... what a missed opportunity to fix that if i've understood correctly (not had much time to read all the details)

Exodi

On-the-coast said:

is the personal allowance still withdrawn from 100k? so we still have the 60% marginal rate from 100k through to 125k..... what a missed opportunity to fix that if i've understood correctly (not had much time to read all the details)

Yes - see below from BBC, in particular the sentence at the bottom. So now the whole higher rate tax bracket is effectively taxed higher (62%) than the additional rate bracket (47%).

purdyoaten2

On-the-coast said:

is the personal allowance still withdrawn from 100k? so we still have the 60% marginal rate from 100k through to 125k..... what a missed opportunity to fix that if i've understood correctly (not had much time to read all the details)

No change at all there. In fact, it is absolutely ringfenced by confirming that the 45% rate band will commence at 125140 - exactly where the personal allowance taper runs out.