The loss of an individuals personal allowance (for earners over £100,000) should increase each year with inflation.

It’s just so obviously stupid and de motivating. We need to get the economy moving again not penalising the talented and hardworking. The benefit claimants laughing at “the rich” being taxed will have to face the reality that those paying for everything will stop bothering / will leave.

YANBU. Income tax should be progressive. The £100k cliff edge for childcare and the tapering of personal allowance is nonsensical and encourages workers to put the brakes on or reduce the effect of the cliff edge tax (legitimately) through higher pension payments. These cliff edges need to be scrapped. Reduce the 45% threshold from £125k to £100k. Someone earlier mentioned the Laffer curve. This is what it’s about…. people would be happy to work harder and pay 45%. I bet the overall tax take would be higher - and the productivity of the country would increase - than the current system which encourages talent to fall short of its potential, early retirement and reduced hours.

5128gap is always a bit free with judgement and opinions, and short of sensible suggestions.

I think we have just decided today that our best option is to move abroad. @Recoverypro , no, we don't run a large company but we started a manufacturing company 30 years ago, and it is still trading quite successfully. However, we're almost 70 and would like to retire.

It sounds like you have all the easy answers do you run a large company and if not, why not?

This is a good point.

If you go from 25K to 100k you are earning 4 times the salary but paying 9 times more in tax.

If you from from 125 to 200K you are earning 1.6 times the salary and paying 1.8 times more in tax.

The thing is however - that once you go over certain income thresholds (like 100k) you also lose all benefits (child benefits being the biggest) and over 200k you also start losing your pension allowance.

On top of this, the top 10% of earners already contribute 60% of the income tax. We lost loads of high earners post Brexit and the loss of them is definitely why we now have a country where more of the population are claiming benefits than putting in. People warned against taxing the high earners too much and they were right. No one is going to actively work against their own best interests and it's foolish to demonise the segment of the population propping it up.

It's all maddening!!

the transferring of more than 10% of PA would be helpful, 100% transfer would be good and an alternative to nursery in some cases where its not an option due to additional needs

I don't think the system works great at any stage for anyone. I wish they'd take single income families into consideration more.

My dh has turned down pay rises as we would be worse off and we are on 60k before tax (so around 45k after) we are basically a one income family as I can only work minimal hours (child with additional needs childcare doesnt exist/too expensive) We don't get any other benefits/help.

We get some child benefit but have to pay some back via self assessment which is a pain (his company are yet to get his tax right to take it straight from wages)

If he took the pay increase we'd be worse off even if he put it in pension which his company has a rubbish one. In real terms we'd be down £330 a month which we need to live. If we had to pay more tax but wages didn't increase in line with this I'm not sure how we'd survive. We are already pretty basic cheap no thrills lifestyle.

We'd be at least £500 better off a month with full CB if we both earnt 30k each but this isn't a option. There is no incentive for my dh to progress his career but seems ridiculous to turn down promotions or bonuses. There is also limited mobility for us to change and move out of the situation. Our childcare needs will be high for a lot longer than most all the while my earning potential goes down and the COL goes up.

The post you initially replied to mentioned people in their late 40s. This is not a retirement issue. We do not, in fact, need a system to persuade highly skilled 40 something consultant doctors to work less, even though they don't actually want to.

The NHS most certainly does need better succession planning, training and progression, but part of that actually requires consultant roles to be filled. Having senior and highly skilled doctors around them is part of how the junior ones turn into consultants!

Oh they are killing the economy, killing people's ability to have spare money to spend and doing nothing to grow the economy.

I’m not saying I agree with the policy, I was explaining why it’s like that. Unfortunately despite her statements about supporting growth, Rachel Reeves’ decisions so far have achieved exactly the opposite effect on the economy.

I agree with you

But it means people (and especially lower income) have less money to spend.

Money being spent is what drives the UK economy. God knows we barely make anything and our energy prices are not constructive to industry moving here.

The whole tax code needs rewriting and massive simplification IMO. The distortions around the cliff edges in both income taxes and universal credit hours worked are exaggerating the worst effects of both tax and benefit issues.

You don’t actually get the 100,000 you realise? More than half of it is taken off with tax, national insurance etc

Why do you think it doesn’t lead people to limit their earnings? There are many people on this thread saying they limit their own earnings for that reason. Are they mistaken about their own reasons?

If you were asked to pick up another shift at work, but in return you lose your entire childcare hours, would you accept?

it’s not that different to the opposite end of the financial spectrum problem - the post the other day about the family not wanting to earn more because they’d lose UC.

Why would you want to do more hours in your stressful job (cos that’s likely if you earn over 100K) when those extra hours effectively don’t make you much more money? In fact in some cases they cost you money with nursery fees etc! I’d definitely just drop a day and enjoy my life more, especially if you’ve got young kids.

If the system didn’t stifle this ambition then there would be a higher tax intake, more NHS consultants etc - so yes those of us who earn way below 100k (ie me and my DH) should care about this because it does ultimately affect us too!

Yes literally no point going for level above at work!

on £200k total tax deductions are £82k / 41%
on £125k its £46k / 37%
a difference of 4%

on £100k its 31% £31,349
on £25k its 13% £3438
a difference of 17%

But everything else is the problem, tax is the problem as whilst people are blaming the tax they don't look at the low wages - which are a problem. People state if you put the wages up, then inflation will go up - yet wages have stayed low and inflation hasn't, so that doesn't work out.

Then we need better succession planning, training and progression so we're not overly reliant on a pool of people who have the resources to (understandably) jump ship for more leisure. Not every aspect of a senior person's role is highly skilled. A less experienced person can take on some of it, upskilling in the process. We all retire at some point and less experienced people take over. This needs to be managed not avoided by offering financial incentives for people to keep working away when they could be enjoying life.

This thread has made me look at my 2010 wage vs current wage. In numbers I’ve more than doubled it (£30k to £68k) but in real terms (using an inflation calculator) it’s only around £12-13k more. That’s less than £1k per year over a 15 year period in which I’ve had multiple promotions, I work much longer hours and have significantly more responsibilities, including legal liabilities. That’s a bit depressing!

My partner is facing the cliff edge, as he’s just inched over £100k and is putting more in his pension. He’s been approached about better paying jobs over the past 2 years but hasn’t put himself forward as it wouldn’t make financial sense due to childcare etc.

The other problem is that by those NOT moving above £100k means that those in lower wages don’t get to move up either in salary.

It is the wage issue with min wage - raising it dramatically means that those on proportionately more rightly require additional. By people jumping ship at £99,999 we are escalating stagnation. And yes, when you are on min wage/low earners it’s a fortune and seem unfair - many of these roles are critical.

We need a solution, and there are more sensible taxation policies that would be fairer. The alternative is losing multiple higher earners and forced cuts and poverty becoming further widespread.

And I’m nowhere near a high earner - still in the 20% bracket.

On the other end of the income scale - they should increase the cut off income level for free prescriptions and dental treatment etc. This has stayed the same despite the min wage increases meaning people who used to be able to get help with it are just above the theshold now but cost of living increases mean they aren’t better off than before.

All the thresholds are a nightmare to those just on the edge of them and often unfair.

It's a bit short sighted to say that as the top 10% of earners contribute 60% of all tax. Disincetivising high earning by punitive tax measures is a one way ticket to a situation where more people take out from the state than they put in. Which is where we are as a country. This thread is full of people saying they have cut hours, stopped climbing up because of it and that is a net loss to the treasury.