60% Tax Trap and Childcare Tax Traps

Grumpy_chap

borris78 said:

Grumpy_chap said:

borris78 said:

This country have a plethora of direct and indirect taxes which puts the real rate of tax for someone on £50k close to 50%. 

I am not sure that the tax rate for someone on £50k is close to 50% unless you are considering VAT, Council Tax, etc.

Yes as I said, direct and indirect taxes which includes council tax, VAT, energy taxes, insurances taxes etc. Plus any pay rise above £50k previously (now £60k) would have a marginal rate of tax of over 60% for someone in receipt of child benefit. 

Thank you for clarifying.
Is that high(*) and / or surprising?

(*) compared to historical levels for UK or compared to international benchmarks.

borris78

Grumpy_chap said:

borris78 said:

It is therefore absurd to say a £50k salary is high. As a salary it is higher than average but salaries are not the only form of income AND it is ultimately household income that matters especially for families. 

You are entitled to your opinion a to whether £50k salary is high (or not).

It isn't an opinion, that's the thing. £50k may be a higher than average * salary * but a salary on its own does not dictate how well off someone is, since other forms of income have to be taken into account, and household income is a key driver of how well off someone is. There's plenty of people on £12k who drive new cars and go on holidays, and there's also plenty of people on £50k who are skint just covering the main bills. 

There are various government stats that cover household income. Overall net (disposable) household income in the UK is around £33,000 which is similar to what someone on £50k would take home after tax including council tax. For those with a family, a £33,000 net household income is well under the median. As I explained earlier, those in receipt of in-work benefits can have a similar net income and no one would call them high earners. So when we look at this, taking all relevant things into account, £50k is not a high gross income from the household perspective, which is how most people live. This is the issue many of us have had with this child benefit tax, in particular government and other outlets throwing around the deeply misleading stat about someone on £50k being in the "top X" of earners.

MetaPhysical

borris78 said:

Grumpy_chap said:

borris78 said:

It is therefore absurd to say a £50k salary is high. As a salary it is higher than average but salaries are not the only form of income AND it is ultimately household income that matters especially for families. 

You are entitled to your opinion a to whether £50k salary is high (or not).

<>Snip
 This is the issue many of us have had with this child benefit tax, in particular government and other outlets throwing around the deeply misleading stat about someone on £50k being in the "top X" of earners.

Absolutely 100%.  And to make matters even more perverse, many of those in receipt of these high benefits think to sting those on a modest £50-60k with them thinking that this is a "high" salary and to soak the buggers.  Little do they know that the professional person earning that salary having to support a spouse and family is "on" less than many of those who won't get off their !!!!!! and go to work.  That's what riles me most about the "High Income" Child Benefit Charge.  And to say this has been brought in under the watch of a Conservative government, the supposed party of low taxation (not).

[Deleted User]

In 2010, when the current government came in, one paid higher rate tax at income above 43875. That has increased by 14.5% in 14 years. 

CPI increased by 43% in that period.