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

It's not though. There's a lot of people taking active steps to avoid it, such as dropping a day at work or diverting pay into pensions to reduce their taxable income. As a result, those people have a lower disposable income and are spending less in the service & retail industries, hitting anyone who works in that sector. It also reduces the overall amount of tax collected because people are deliberately earning less, so it affects all of us.

I doubt the policy will ever change though. It wouldn’t be popular amongst the majority of voters who genuinely believe that anyone earning £100k is rich.

Of course it makes no sense. They should make it much more gradual or at least increase the £100k by inflation each year. It’s been stuck at £100k for ages. I just hit this threshold this year and have to pay for childcare so I increased my pension contributions. I will have to always put my cost of living rise in my pension every year to avoid it which means I will effectively be earning less and less each year now because of inflation.

Yup, nail on the head. It's the inevitable consequences of ill-thought-through policies with no regard to human behavioural aspects. It's common sense that people will reduce their working hours/not take extra shifts or not take promotions etc., if they're going to be worse off, or not better off enough to make it worthwhile losing their valuable time. Trouble is that far too many people are still in denial about human behaviour and seem to think that people should continue to work more, even if there is no benefit, for societal good - utterly deluded!

I've had clients who've worked for the NHS, i.e. dentists, locum doctors, locum radiologists/speciality nurses, etc., and all have basically done exactly the same, i.e. not take extra shifts, not take job offers, reduce working hours/days, etc., to avoid these tax traps and tax cliff edges. It just makes the waiting lists worse.

This definitely has ripple effects in the NHS. I actually would happily cover the odd shift at short notice, do a few extra clinics to catch up, take on extra leadership roles, projects or trials. However it would literally cost me more than I’d earn. I like my job and I’m dedicated but paying to work is a step too far.

I take unpaid parental leave to stay just under the threshold. Nice to have the time with the kids, but means my clinics don’t get done. And I work in a department where lots of consultants have young kids and are doing the same. Feels like a bit of an own goal from the government.

People on £100k are closer to being destitute than they are to being in the league of the super rich.
As always, we are systematically encouraged to go after the wrong people.
The £100k tax trap is never likely to bother me personally, but the principle of it bothers me a lot. We are not heading in a good direction at all.

Like stupid local councils who see a loss in revenue from car parks, so increase car park charges again, then year later, another loss in revenue, so they increase car park charges again. Never seem to actually understand that every time they raise charges, fewer people park there, so not only less car park revenue but also slowly killing off the High Street shops due to lack of shoppers. It's what happens when people who are economically illiterate with no experience of real life get into positions of power!

Where it is a trap is often the difference in working more days and that is the bigger problem for the economy and society as a whole.

eg you could hypothetically work 5 days for £110k per year or 4 days for £88k. If that person pays 5% pension and no student loan, they’d be on a weekly of £1349 versus £1134 so an extra £215 for that extra day. Except the 5 days versus 4 potentially involves an extra day of commuting and a day of childcare which could easily be £150 gone straight away if there is a child at nursery. In addition, that extra income means they lose the subsidised nursery hours on every other day they are working so they could actually be worse off for working more.

When it comes to PIP there’s a new paper looking at options for reform just published here: ifs.org.uk

It isn’t their fault, of course. Just like it is not the “fault” of some who have children. Perhaps you only found out you were pregnant too late for a termination? But the tax system doesn’t differentiate.
And as for means testing? They do it for pretty much all other benefits, why not PIP? We all submit a tax return either individually or via an employer. They already have the data.

Because it's not their fault to be disabled right? And also many say it's more expensive to means test it

Absolutely, no one chooses it, but the costs are the costs. If you can afford to meet the costs why should it be paid? Same as with children. Perhaps your contraception failed. Perhaps you were coerced into having said child. The benefit system in that case makes no distinction.

I think in a way, the cliff edge is similar to the iht boundary - but obviously worse because it's money you are currently earning.

(Ive never earned anything like 100k)

Having a stark line where above it, there is a punitive tax almost encourages people to tweak their affairs so they can avoid it...when if it was tapered or seen as more fair, that wouldnt be the case and more tax would potentially be collected.

I dont understand why if you earn over 100k you lose your personal.allowance when youre already paying a large chunk of income tax. There was a report this week on the news about the state pension going over the threshold for paying income tax for the first time, and it said (in effect),dont worry, those who were only just over the threshold wouldnt have to pay any tax ....and yet being only just over the threshold of 100k would be quite punitive in terms of tax.

Any tax or benefit change which results in lower income after a gross increase is unfair. This isn't say I think it should be corrected by decreasing the tax of people earning over £100K.

I walked into that one! Or did I?

I said that both create the same perverse incentive to work less. “Keeping more of your own money” at £100k is neither morally nor economically the same as “keeping more of your fellow taxpayers’ money”.

A net contributor earning £95k a year and staying under the threshold, and a net recipient of taxpayers money staying under the threshold, occupy fundamentally different positions. Do you really expect me to believe you don't understand the difference?

You were the first to suggest that reducing your hours to keep more of your own money and reducing your hours to keep more of your fellow taxpayers money is essentially the same thing.

And that you should be grateful for the opportunity...

I suppose if I was used to other people picking up the tab, rather than paying my own way, I might see it that way too.

I was Labour last time but not any more.

I’m with Kemi. Centrist Tory tax without the madcap reform policies.

And I dare say they would be called lucky and selfish for saving themselves by building a lifeboat and smug for offering space to people who have no lifeboat...

I think this is exactly right. I think under this government there won’t be any reform of these things though, and I just fear higher taxes. More net contributors will leave, and then they’ll need to raise more taxes again

My fellow traveller! Typically just a few independents. But none of the mainstream parties appear to cater to those of us of this mindset.

It’s not just Labour. The Tories left the 100k tax trap firmly in place despite having years to do something.

Insisting it’s simply Labour is hard of thinking.

Because it’s popular with the anti affluence attitudes endemic throughout the UK.

It’s weird that we have to go to a position of people thinking that keeping more of your own money is “being handed a life jacket”!

But then people on this thread have compared reducing your hours to keep more of your own money to reducing your hours to keep more of your fellow taxpayers money and I am no longer surprised.