Liz Truss to raise income tax thresholds?

[GreenLunchBox]

There are rumours that she's going to increase the higher tax threshold to £80k. I think this is a good idea and will increase productivity. Sunak keeping the threshold frozen was a sneaky stealth tax. In this time of rampant inflation it's unfair for people to receive a small payrise and find themselves significantly paying more tax than before

It will also help with the rental property shortage as it will help to mitigate the unfavorable tax changes for landlords so less will be likely to sell up

The poorest in society don't actually need tax cuts they need higher wages and better public services. But those are paid for by higher tax take which isn't the same or even aligned to a higher tax rate. The more you tax the real wealthy - and I don't mean middle income people, I mean wealthy - the less tax you bring in. Sad but true.

This will be interesting in Scotland for the teaching profession, the top salary band for a non promoted teacher is currently £42,300 odds. If a pay rise is granted this year (and the unions are asking teachers to reject 5%) this will push most of the teaching profession into the HRT bracket for the first time. This will be unavoidable unless you were to drop days. I think Scotland rate should be the same as England’s didn’t know it wasn’t until this thread

I agree with the OP. I am fed up paying 60% tax and not seeing much of the pay I work hard for. I appreciate there are those that need a helping hand but to penalise top earners is not conservative. To free up top earners will drive others to aspire to be a top earner. That’s what made me work my career like I did, knowing that if I put in the work that in the latter years of my career I can earn (and bank) a good wage. If Liz makes this tax change as well as the NI reduction I believe the UK will prosper. I understand others will disagree but I have not worked my career like I have to pay for others. Labour government to me is an ideal that just doesn’t work and ends up in a slowing economy and stagnant growth. Let’s face it, the last labour government that worked was Labour in name only.

Only once briefly went into higher tax bracket and don’t think I will again
don’t Agree will higher tax I took a secondment moved into higher bracket the job was very demanding long hours very pressured why should I have to contribute more because I got off my arse and took a step up at work

Who pays 60%? The higher rate is 40% and only for earnings over 50k. NI drops to only 3.25% at 50K too doesn't it?

You aren’t paying 60% tax, it’s only on a small proportion of your salary that is above the threshold. I was on a six figure salary before retirement and was ok with contributing tax to public services, and there was plenty for my own needs. Greed is an unattractive trait.

Go check HMRCs website

Do you mean the removal of the personal allowance means it works out higher from 100 to 125k if I've got that right? I agree tax shouldn't effectively go up then down, but you are not paying 60%, only on that part of your income.

I don't pay 20% tax and 13.25% NI, only on income over the threshold.

I do! Tapering rules.

I think no one earning less than £25k should pay tax and leave it at that

Yes! It's what pension AVCs are there for, and a job paying £55k is likely to come with a decent occupational pension.

This is precisely what I was referring to. I am paying 60%. Good grief. Your comment is contradictory. Whether it’s on a “small” amount as you put it or not, is irrelevant to my point. It feels pretty large to me when I look at my payslip and when your pay hits it, it is demotivating.

The remainder of my post is not necessarily in reply to or directed towards you CherryGenoa.

I don’t agree that those in need should be funded by taxing “the rich”. They need help through better jobs, more opportunities, better education, leaders in government and industry that inspire. And yes, that needs funding. All people are motivated by now is being told they are the victim. I certainly am not rich, and it feels like one step forward and two steps back at my pay bracket. I am held here in stasis with the motivation being sapped from me. To make it worse I am labelled as someone that is doing something wrong for earning a high wage.

I know tens of people that earn as much as me by claiming from the state for various nonsense reasons that clearly do not effect their ability to go and work and earn. Imagine that, you’re crushed by tax, you work a 9-5 and you build a business for extra income, only to see your neighbours and friends bring in the same money by practically doing nothing. And I am made to feel guilty for not wanting to pay higher taxes!! Something is deeply wrong.

I will save and save and save for my retirement. There is a clear argument that I’d be better off just spending it all and get handouts. Especially when it’s my time to go into care. I’ll be stripped clean by vultures to a corpse, meanwhile someone on benefits gets off scott free.

Liz is right. She needs to level the playing field with tax, allow people like me to earn more, to grow my business and employ people. That’s how a capitalist society works. It generates growth and so the cycle continues. Tax people like me and the economy goes nowhere and so taxes continue to get higher. And so the cycle continues.

Which do you want?

Actually, if you take objection it’s likely you either want to be able to sit and watch day time TV and get paid for doing so. Or you’re happy with your status quo and just want more money for doing the same thing.

Wake up. Life doesn’t owe you a living.

Unpopular opinion? But it’s not. In this woke society everyone is afraid to say publicly what they are thinking.

I am teaching my kids to aim high, meanwhile their school friends are bumming around too busy spending their money on designer clothes and vaping and settling for doing the minimum. It even has a name these days “quiet quitting”. My kids already are learning to invest and carve out a career even before they’ve started high school. I hear feedback about my kids from teachers that clearly show parents of other kids simply ship them off to school for childcare. Remind your kids why they are going to school. Yes a school day can sometimes be boring but remind them that the teacher is a person saying stuff not for the sake of it but to empower knowledge. Your children are literally at school to help them build a career. Remind your kids of this. I’m slightly off topic but I firmly believe parents have a huge responsibility for the success of our country. But instead they want someone else to hold the responsibility. And yes, my kids still have fun being kids too, the two approaches are not mutually exclusive. And they’re also a nightmare :-)

This country needs a kick up the a**.

Yes I do mean this. And according to my household spreadsheet and the tax returns I complete it most definitely calculates to 60%. However you decide to describe it,, slice and dice it, it’s what it is.

Its another part of the problem. “We” (meaning people in general, myself included until I taught myself) aren’t taught money at school. Personal finance should be a STEM subject. Like some people not knowing there’s a stealth 60% tax. We need to know the Highway Code, why not a finance equivalent because it is so fundamental to life as we’ve designed it. Kids should be taught they need to be a profitable entity in this world. As well as to eat mud and pull flies legs off.

Yes I do mean this. And according to my household spreadsheet and the tax returns I complete it most definitely calculates to 60%. However you decide to describe it,, slice and dice it, it’s what it is. 60% of your whole income. I'm in the 20% bracket but don't pay 20%, it works out as 8.7%.

So if you earn say £120,000, then you are saying that you pay £72,000 in tax and only take home £48,000?

No, you were right the first time. Between 100 and 125. I do not see 60% across all my wage of course, and this is not what I was referring to in my original post. You are close to putting words in my mouth. Perhaps I could have been a bit more clear but 60% was a snappier way of referring to it.

You see lower than 20% because presumably you still have your tax free allowance. My allowance disappeared as I earned over 100, effectively a doubling up of tax taken at the higher snd allowance removed at the lower end, so to speak.

Lol no. You’ve made an incorrect assumption. I was not referring to 60% being across 100% of my wage. I was referring to the 60% I effectively pay over 100k up to 125k. In my eyes, and my point was, this is a stealth tax. It’s detailed on the HMRC website.

@pleasemayileavethetable
“I know tens of people that earn as much as me by claiming from the state for various nonsense reasons that clearly do not effect their ability to go and work and earn.”
Can you elaborate please?

My heart bleeds for you.

If you earn over £100K then this is absolute rubbish:

“I know tens of people that earn as much as me by claiming from the state for various nonsense reasons that clearly do not effect their ability to go and work and earn.”

If the tax take over £100K upsets you, pay the excess salary into your pension. You can take some back as a lump sum on retirement. High salaries give you options. Anyway, I’m not going to engage further because I don’t believe you are genuinely a high earner.

I wish I could. But I know enough that several families receive benefits for family members that do not require any real practical help yet the they claim “because they can”. They receive a nice brand new free car every three years, all maintained. Their kids can get free taxis to and from school. I know from various conversations their net take home is close to mine when you consider what they’d pay for a car monthly etc. A few of them have assets because of this situation (extra houses that they were provided with and then bought and now let out).

Benefits like these should be means tested and an actual human should visit their homes.

People ‘playing the system’ knowing not to work too many hours, to ham up conditions. To misclaim expenses.

One even gets Sky paid for because it’s to help the child!

Ridiculous.

What they do of course has little bearing on me until I start seeing my tax increase because the government are wasting so much money.

If you pay into a pension you don’t loose child benefit at 50k anyway. If your pension is deducted before tax that is the figure that they use to work out if you are over the child benefit threshold (income after pension deducted).

@pleasemayileavethetable So it’s ok for you to feel demotivated on the 60% tax on earnings over £100k, but people who feel demotivated on their minimum wage that get taxed over £12,000 should work harder?

I agree people take the piss because they can but frankly the gains from having perfect attendance, going the extra mile, being good at your job are minimal if you’re at the bottom end. There’s no point knowing how to invest money if your wages don’t last until the end of the month.

This is crazy! Why don't you salary sacrifice your extra income into your pension? You can also sacrifice any bonuses into your pension and avoid the 40% tax. I do both and stay just below the £50k threshold.

100% agree with what you wrote and I wish more people in this country had your mindset!