Pension Input Amount and 60% marginal tax rate

ex-pat_scot wrote: »

The alternative, which many of my peers follow, is to reduce the hours worked so as to avoid entirely the 62% band. Their (not unreasonable) view is that they don't see the point in working additional hours but losing 2/3 to tax.

The problem with that (though I assume many on much lower pay would class it as a 'nice problem to have') is that a good proportion of the jobs which pay say, £105-125k a year and cause you to lose your personal allowance are simply not available as an equivalent job for four days a week for 80% of the pay (i.e. £84-100k being purely 40% bracket).

Generally people clocking in and out at the factory or office gate and getting paid by the hour with some voluntary overtime - which they could choose to cut down and avoid earning the last few thousand pounds of income - don't get to six figure wages. Many of those that get there tend to be those on fixed salaries where you get paid an amount per month for your professional output which could sometimes be 40, 45, 50, 60+ hours of work spread over the week from time to time including perhaps some evenings or weekends as the job demands.

Some of those people going to their employers and asking for an arrangement where they only put in 80% of the effort or effectively do 0.8 of the job during Monday to Thursday with a nice long weekend each week, and make the employer recruit someone for the other 0.2 and deal with the inefficiencies of that, will find they get turned down and it would be a career-limiting move.

It can of course work better where you are independent contractor, from, owner of own business etc and have the luxury of turning away clients or extra work once you reach your target income, and perhaps if you're reaching these high salaries when in the twilight of your career it might be easier to "slack off" without consequences for career progression or choice of future opportunities.