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Original poster

Tax brackets

110 replies

Vergus · 06/02/2025 11:22

AIBU or am I justified in thinking that the earnings difference is grossly unfair for people on the lower end of the 40% tax bracket - so those on £37,701 per annum (which is when you start paying 40% tax - up to £125,140 per annum.) Someone who earns on the lower end of this banding is paying exactly the same amount of tax as someone on £125,140. That's nuts! Surely they should stagger it more effectively, so that you don't have people on essentially a modest, average wage paying the same as higher earners? Or introduce the jump from 20% to 40% at a higher level, so around 60k per annum?

I just think the disparity in this strange standardised approach to two very different income levels must leave those who just earn enough to push them over the threshold very badly off indeed.

OP posts:
Original poster
Vergus · 06/02/2025 11:34

@Defiantlynot41

You are not in the 40% tax bracket if you earn £37701 - you pay 20% tax on earnings from your tax free amount of £12570 on the next £37701 of income and 40% over that up to the next threshold- so 40% on approx £50k not £37700 (figures from memory as I'm out and about)

Ok - but that's still a massive disparity between someone earning say, 50k and someone earning 125k. It doesn't seem like a proportionate approach.

OP posts:
Kuretake · 06/02/2025 11:34

Well no the people at the bottom of the banding are paying 40% on almost nothing. Are you aware you only pay 40% within the band not on your whole salary?

Hayley1256 · 06/02/2025 11:33

The tax bands changed the other year. Now income between £50,271 - £125,140 is taxed at 40%.

Original poster
Vergus · 06/02/2025 11:31

It's a massive banding and the people at the bottom end of that are much more likely to feel the hit - obviously lifestyle choices and all that but still, it does a strange setup. Why not stagger the bandings more consistently so there's more of a relief for those at the lower end?

OP posts:
Defiantlynot41 · 06/02/2025 11:30

You are not in the 40% tax bracket if you earn £37701 - you pay 20% tax on earnings from your tax free amount of £12570 on the next £37701 of income and 40% over that up to the next threshold- so 40% on approx £50k not £37700 (figures from memory as I'm out and about)

VickyEadieofThigh · 06/02/2025 11:30

Vergus · 06/02/2025 11:27

Sorry - what I meant was they are taxed the same percentage out of their salaries - although I think you know this is what I meant

Whatever you meant, the higher earner is taxed at 40% on significantly more of his/her salary.

imnottoofussed · 06/02/2025 11:29

It is quite a big band but I'm not sure how any other cut off could be justified any differently

imnottoofussed · 06/02/2025 11:28

I think you start paying 40% tax when you earn £50271 not the figure you've quoted.

£12750 is tax free. Approx £37700 20% then anything above is 40%

Original poster
Vergus · 06/02/2025 11:27

Sorry - what I meant was they are taxed the same percentage out of their salaries - although I think you know this is what I meant

OP posts:
VickyEadieofThigh · 06/02/2025 11:23

They're not paying the "same amount of tax" - the higher earner is paying a lot more, because they have a lot more taxable income. The person at the lower end of the higher tax bracket only pays the higher rate on their earnings above the higher rate threshold.