Tax should not be paid for working over time

[Dssen]

Me and ds were chatting the other day . He's done some over time but he said sometimes it feels pointless because the tax man takes quite a bit of it . We were thinking that if someone works over time that person should not be taxed. It should be a kind of reward that if you work overtime it's tax free .

Not going to happen but wishful thinking.

Your son could do with looking at how tax is raised - all income is taxed. He also needs to understand that many who do overtime don't get paid for it as it as they are salaried. This is where workers have lots of power but don't seem to flex it. When Labour screw over the working population a work to rule would be a good way to show them working people have had enough.

Employers would just exploit it to their advantage...

Exactly, which would have the negative side-effect of destabilising employment - if the business was going through a quiet period, people would find their hours drastically reduced.

@Dssen has your son ever had his pay and taxes explained to him by someone that understands how pay and taxes work?

I was in a meeting this week discussing helping young people become ready for work, and there's this massive assumption that once you start work you'll somehow absorb from the atmosphere this sort of information and be able to understand it.

They won't be. His income is higher so his tax is higher.

The implcatikn from the OP is that he's being taxed more for the overtime otherwise why would he say that the tax man takes quite a bit of it?

That applies to all of the ordinary hours too. Assuming he's not a higher rate payer the basic tax and NI isn't unreasonably high enough for that observation imo

Yes, I think so too

Oh really??

Someone upthread says they WFH yet pay in full for utilities

Interesting!

No, it’s not feasible. Let’s say someone earns 100K (salary) but in order to do that works 60 hours a week. Are you saying that only 2/3 of their salary would be taxed? How is any of this going to be monitored to be implemented, it can’t work.

That poster maybe referring to the small tax allowance you can claim if you meet certain conditions.

Yes, if you are PAYE employed and WFH you can submit a request for relief to HMRC.

If you are self employed you can make a deduction based on a set % of the utility, or if the WFH location is separately metered and supplied that amount (the latter would be uncommon)

For the vast majority that work overtime they will still be taxed and suffer deductions at roughly the same rate as they would for their normal pay it’s just that like that for their normal pay the tax free allowances and Nic isn’t paid up to the lower limit.
I often hear people say that it’s not worth it because they take x% but that % is in all likelihood the same .
if you want to reduce the tax/ Nic burden get a second job because if it’s under the Nic threshold you won’t pay any Nic yes you will pay tax but hey that’s life

Equates to £6 extra tax free so on basic rate is around £1.20 in your nett pay

You can contribute to a private pension over and above what your employer will allow. The tax works slightly differently but you still get the same tax benefits of contributing.

I suspect the tax on overtime looks disproportionate because he has already used up his personal allowance so the marginal rate is higher than his overall tax rate. He might also being taxed 'too much' in the month due to HMRC thinking he will be working overtime every month. This will be adjusted later in the year if it's the case though. At the end of the year, he will have paid the righ amount of tax for the money he has earned (assuming he is on the correct tax code).

@AnellaA

just ignore, its bitterness from
people who can't WFH & who think people who WFH are just skiving, it says far more about them, than you.

Would people on zero hour contracts pay no tax?

I keep forgetting that marginal tax is an alien concept to many.

I read something recently and I cannot for the life of me remember who. Anyway the idea was that everyone gets a £100 000 lifetime tax limit.

So until you have earned £100 000 you pay not tax. So high earners start paying tax early but mere mortals get to save for a house deposit, pay for childcare and all the expenses you have when relatively young.

I thought it was an interesting idea.

I think Dan Neidle wrote about it recently as part of his series of posts/articles exploring different tax regimes/options.
x.com/danneidle

If anything bonuses below certain £ / % of salary should be tax free

Overtime would be too easy to play the system with - especially if you were self employed and paying yourself a set wage

Childcare costs and availability are still outrageous but so is public transport - I'm my wage inflation hasn't kept up with public transport cost increases so more needs to be done to have low cost travel options

Again very easy to manipulate. Pay in shares, dividends, trusts.

Yes this

I think commuting costs could be tax free

Most sensible answer on here