AIBU to think the £100k tax trap is unfair?

That explains the occasional alignment. Meant in the nicest possible way. 🙂

We've got something in common then. I'm anti-Tory too, but I'm also anti Labour!

If you really think that you’re not reading my posts properly. I’m anti Tory, not a Labour supporter.

I refer to my previous comment about all the things Blair/Brown "could have done" in their 13 years, but didn't.

You seem to think I'm a Tory fan. I'm not. I detest all the main parties who are only in politics for themselves and don't give a toss about the public until they start lying at election time. Unlike you who is a Labour-Luvvie who clearly thinks they can do wrong.

The Coalition ended in 2015, why wasn’t it reversed in the succeeding nine years? The triple lock was also a Tory idea which they had nine years to reverse.

Means testing child benefit was a Libdem demand as part of the coalition.

Labour had 13 years to reverse privatisations, reverse the council house sell off, etc.

All the major parties are as bad as each other. We're doomed!

Yet somehow successive Tory governments failed to reverse it despite having 14 years to do it and started means testing child benefit.

No the withdrawal of personal allowance over £100k was introduced by Labours alistair darling!

It was Tory policy, yes. It was done because it was a stealth way to raise taxes, and tax increases are unpopular and officially Tories are against them.

The tories had 13 years to change the threshold at which / end the removal of the personal allowance at £100k. they didn’t.

They also introduced 30 free hours form 9 months and opted to exclude earners above this threshold.

It’s not a left / right thing. I’m not sure what exactly I think it is driving it.

@PoolDepth

This country’s approach to taxation is ridiculous. I can’t believe we actively disincentivise people earning!

It's the "left's" policies of hate, envy and spite that cause it. They want everyone to be equal, even if that means everyone is dragged down to a low level, whether it's income, assets, education, health, or whatever. They absolutely hate aspiration and people trying to better themselves.

Especially when you do more work for said pay rise and see none of it reflected in your pay stub. Nobody would want that and it's why there isn't much drive to climb the ladder in the UK.

My husband went down from 5 days a week to 3 and his take home salary has only changed by a couple hundred a month bc the rest was all just tax. It's ridiculous.

Everyone should get the same tax free allowance! It’s appalling that this was removed from high earners.

When I earned £132k a year, I used to put £33k into my pension each year to drop to £99k.

Now I earn a lot more, I’m caught by the pension tapering trap, so any pay rise I get reduces the amount I can put tax free into my pension. So I’m dropping to part time. I might as well enjoy more free time. I’m not willing to pay more tax 🤷🏼‍♀️

This country’s approach to taxation is ridiculous. I can’t believe we actively disincentivise people earning!

I do believe it to be unfair. I heavily input to my pension and took bonus as stock options vs cash to help buffer for this. Only once passed the £125K did I start actually taking the payrise. Was fairly depressing- working all hours, getting the payrise and not seeing the benefit in terms of my disposable income. That said, my pension has however hugely benefited so I can’t really complain. Would suggest you get a good IFA and work out what is best for your family

When civil service lawyer husband's salary reached £100k he retired. No National Insurance, no pension levy and no travel costs mean his take home pension is almost as much as his take home salary was.

@AbraCaStabYaI think the problem is that a lot of us need the money now, I know for me that’s stopped me filling a pension. Two small kids in nursery is over £5k a month (a whole £100k salary). A mortgage for a house commutable to London is expensive. The commute itself is almost £40 a day for half an hour on the train.

Even if I went below £100k and got the free hours, it’s still not actually free, so you’re still paying about half of the nursery fees. So right now fits not possible to backfill my pension

Just put anything above it into a pension, you can top up up to 60k and can backfill up to 3 years.

Of course the taxes in the UK are far too high. You have some of the highest tax rates in Europe with none of the benefits. It's like they said, let's create a country as shit as America with the taxes of Europe. No wonder people are leaving in droves.

I completely see it’s ridiculous as though these cliff edges don’t affect me (basic rate taxpayer), not having the public service personnel we need eg health service because they’re all going part time does affect everyone.

The salary sacrifice stuff for cars seems mad too, unless I’m missing something. I’m wondering what else those who could afford to buy stuff like cars are also being helped to buy and reduce tax.

It’s unfair and it also leads to unproductive behaviours.

We were both NHS consultants to stay under 100K we salary sacrificed cars, that we didn’t really need and reduced our NHS hours to keep the pay down.
We could however do as much private work as we want and kept it within a ltd company.

It seemed bizarre that as waiting lists were increasing we were being incentivised to work less.

Increase to the PA is incredibly expensive as it’s an increase to every tax payer under £100k.

but yes the Government has to stop being so scared of the electorate (and their own backbenchers), learn how to speak to the public so they understand why we’re doing what we’re doing, grow some balls and crack on.

I agree it makes no logical sense at all. Governments (not just one!) loudly talk of cutting spend but not increasing revenue. Not just individual taxation but lost tax take for tax relief etc. Bit of a tangent but as an example the government loses sizeable tax revenue giving oil companies tax relief of decommissioning costs. The mind boggles how much revenue is lost through legal methods like paying into pensions, reducing work days, buying cars and whatever on salary sacrifice schemes, etc.
There are always choices in politics.

They should definitely start with removing cliff edges and focus hugely on credibly and efficiently persuading the argument to avoid the “rich get tax cut”. And increase please to the personal allowances along with reintroducing the 10% rate which I always thought was a good idea.

i feel like it’s an own goal all around. Everyone I know with young children earning above this amount is trying to do something to mitigate the tax they pay, a combination of pension, cars or bikes on salary sacrifice, buying holiday or extra leave, or attempting to go part time. Studies are showing up to £430m extra tax over three years to scrap it, even after accounting for paying extra childcare to higher earners. To me it’s a no brainer - more tax revenue, more productivity, more people remaining in full time work (and so more tax over their lifetimes)

I mean it is quite rubbish but 100k is a very high salary in the UK. Salaries and tax here are dreadful, so you can always look for a job in the US or just throw a load in your pension and either decide to push through til you safely earn out the other side or see if you can go 4 days. I work 4 days now, I don’t need any more money and it isn’t worth it to be taxed through the nose. If family situation allows me to go back to the US in future I might, but I could also skate along until retirement here with less to pass on to the kids. These aren’t real problems are they.

i think the biggest issue is that it doesn't take into account circumstances, my DH earns over £100k with me as a SAHM and loses the benefits, but you can have a couple both earning £50k with all the benefits, it really should take into account the household incomes rather than individuals.

I saw this thread title and thought I'd revisit.

It is about how it really feels unfair.
For me is because:

• It is a huge step in tax take. 40 to 60%.
• 60% is over half of what you earn going to the government. That's a huge psychological barrier.
• as well as taxing, personal allowances are also stopped. Double whammy.
• for those with young kids the childcare loss is even more net negative. Triple whammy!
• the fact that if you earn more than £125 k the marginal rate of tax above that drops again. That feels really unfair that richer people aren't penalised as much.