to think that the threshold for higher of income tax is far too low

[ReallyTired]

www.dailymail.co.uk/news/article-2721477/Surge-police-teachers-dragged-40p-tax-band-More-1-6million-employed-pay-higher-rate-decade-ago.html

Higher rates are starting to hit people in ordinary jobs. In 2003 there were no nurses paying the higher rate of tax and now there are 72,000 nurses in the higher tax band. Middle to high earners are the work horses of the UK economy and high taxes act as a disincentive to working harder or taking on more responsiblity. We need these people generate income to pay for benefits.

I feel that cutting of child benefit also harms the ecomony.

While I generally agree with you RT I don't understand this idea that people are "discouraged" from increasing their income. (Not just you that's said that).

I have never heard of anyone on PAYE asking not to be given a pay rise due to tax. And it's still more, just 60% of more rather than 80% of more (or whatever the rates are).

Many self employed people and the very wealthy use tax advisors to ensure that they minimise their tax bill, so I'm not sure it affects much there either.

If my husband does over time he gets paid more. There are associated costs in going to work. If doing overtime pushes someone into the 40% bracket then the rate of pay for coming in on Saturday morning becomes less attractive. It becomes even less attractive if the person does enough overtime to lose child benefit.

My sil worked 3 days a week because tax stopped it being financially worthwhile to work more. Affording child are for 5 days was impossible.

In the past jobs that were higher tax payer jobs did not offer over time. People in high level jobs work the hours the job needs. Now that the 40% rate affects more people it can discourage people doing extra work.

Ah OK

Don't get paid overtime in the sort of roles I've had.

Ha I'm not very high level though

If people don't work the paid overtime because of tax does that mean more jobs created though?

Economy would work better if people were paid properly for the jobs they do, without having to be subsidised by the govt, and enough people were hired to do all the work providing more jobs rather than getting people to do 1.5 people's work say.

Just thinking out loud really

I agree I feel that people doing over time is cr@p. Workers need to rest. A fair proportion of people are self employed. They have cost in going to work. Going over the threshold is essentially a 25% pay cut for doing more hours.

You only pay the extra tax on the excess though not the whole lot so you still get more money. Just less of the more than you would have had.

"Top rate tax payers pay a massive amount of tax. Far more than they receive back in terms of usage of the country's assets."

I don't think you understand. The country's assets includes a well educated and motivated workforce and a stable society. Top rate tax payers get the biggest advantage of this and thus it's their responsibility to pay more to sustain it. If their taxes are cut, then people who are massively poorer than them will end up poorer. Doesn't seem like a better society to me.

I don't agree with the flat rate thing.

Using the example given by witchway, 25% as being the flat rate for all. In terms of affordability losing a quarter of earnings when you earn NMW is vastly different to losing the same when you are talking about a six figure salary. 25% taxed from a low income household could cause serious issues with people actually being able to afford to, you know, live. Creaming 25% off a higher income will still leave a good amount of money to feed, house, clothe etc. There are plenty on NMW who already find it damned near impossible to live in the current climate on their current (lower) rate of tax. Adding to their tax burden is a grim idea. It will make the poor, poorer.

That said, I don't agree with taxing the arse off "wealthy" people either.

I suppose, I think that enough money goes into the treasury as it is. It would be nice to see it spent a bit more carefully -e.g, I work in the NHS and the wastage / planning is shocking. There is so much expensive "finger in the dam" stuff going on that really it blows my mind.

The person on the national minimum wage has their personal allowance so would not lose 25% of their income. They are also helped through the benefits system. This makes sense as the minimum wage is ample for an 18 year old who lives at home. A single mother would struggle on the minimum wage.

I feel we should look at national insurance. The more employees an employer takes on the more tax they have to pay. I feel that national insurance inhibits job creation. The whole system of national insurance needs an overhaul. National insurance and income tax should be combined.

If everyone who is resident in the uk had a flat rate pension it would be simpler to administer. At the moment the widowed housewife who has not paid enough NI stamps has her income topped up with housing benefit and pension. Often the person who worked their arse off on the minimum wage has a similar amount in retirement to the person who did nothing with their working life.

I wonder sometimes whether it would make more sense for the regions to be able to set their own tax. That would address the disparities in cost of living. I hear so many people say 'how can you say £50k is not a high wage?' but if you live in the South I'm sorry it really isn't. For London, renting, without relying on benefits, it's practically the breadline.

If tax thresholds could be set to reflect local living costs I think not only would it stimulate growth in the regions (more jobs there and an influx of peo

Seven re the overtime many people work specialist roles ie you can't just ship in any old bod to cover,often there is no notice.

Also those on £30k really do have to think long and hard re promotion long term ie will it be worth it?

That band from 40-60 k is actually a bit of a killer.Extremely hard to break over,jobs on this level will involve a lot of stress,longer hours for zero extra pay(you're just expected to do them because you are probably some kind of manager) but all benefits stop,CB goes and you're taxed more-frankly I wonder if it's worth the hassle.The pay increase isn't that great,it's quite surprising how little your pay in your hand goes up for the stress,extra responsibility and extra hours involved.

Personally imvho less stress,lower tax on a lesser paid with more benefits would be preferable for my dh but he's a hard worker.He's not a mug though and frankly in busy times he isn't going to be putting in any weekend hours after a long 5 day week on overtime taxed at the higher rate.It isn't worth it and it's their loss as at short notice they can't get anybody else and wouldn't want to anyway.So they struggle.

Not a mug

...posted too soon

...people moving north for the lower tax) but it would also as a consequence help to rebalance the UK economically. Right now the differences in perception of what money is worth between North and South mean we might as well be different nations

A lot of the SW is poorly paid,but you still have high housing prices.At least in the North you have lower housing costs to go with the lower wages.

YANBU, I'm a SAHM because my wages were crap and I'd have been returning to work to pay for childcare. DH was a few quid over the threshold and after bills we were living hand to mouth and it was awful.

Thankfully he's set up his own business in the past couple of months and it's definitely better.

Yanbu, the threshold actually dropped for a few years when it should have been rising with inflation and scooped a lot of people into the net without them actually earning more.

and it definitely does discourage working above the threshold- i want to work part time because the tax threshold makes it not financial sensible for me to work fridays (oversimplifying the figures).
Say i earn 50k- that is ten grand per day of the week over the year. On a Friday i fall into higher rate tax. So 10k for working Fridays, less 42% tax and Ni, less 8% pension, less 9% student loan- i take home 41% =4100. Nursery costs 65 a day and train is 25=90 per fridayx52 weeks is 4680, a loss of £580 for working Fridays.

it is not quite that simple as obviously pension and student loan benefit you in the future, but in the here and now, who wants to pay for the privilege of going to work for the day?!

The thing is though, the tax system isn't designed to encourage middle earners to work more hours. It's probably better for the economy if you don't.

I work full time (long hours) at a pretty good but not huge wage (£60k). I would not work harder in the hours I am at work if I was taxed less - I am not sure I could to be honest. I absolutely would not turn down a payrise because I don't keep all of it where would the sense be?

Splendid I see your point but if a company has a lot of money(and jobs at risk) if a project isn't rolled out on time it probably is in the economy's interest if employees did do extra hours.Companies can just move their custom elsewhere perhaps to other countries if projects aren't delivered on time.

And I still maintain if a higher tax rate is barely over the benefits cut off either the HTR level is too low or the benefit system too generous you can't have it both ways.

I've never understood why income amounts ing to less than the working wage is taxed at all, only to have some handed back in tax and childcare credits?

I've also never understood how it is possible for those in benefits to have higher disposable income than those in work?

How hard can it be to set tax thresholds higher to avoid taking with one hand and giving with the other?

The lowest earners in society have the highest proportionate tax burden with more of their wages paying taxes when you include indirect taxation.

To my mind, benefits should equal the rates needed to provide basic needs. Working should be incentivised by even those on the lowest rates still attaining a noticeably higher disposable income than those on benefits.

Lastly, sol coal housing giving preferential rates if low rent should be reserved for those in need. It bug me that with solial housing levels so low those who's situation improve can sit right in lower rent properties and even have the right to buy.

*bugger, so many typos. Sorry! I'll make sure to proof read next time.

The tax credits system is overly complicated and it would be simpler if they were scrapped and the minimum wage raised to compensate. But businesses would complain about their wage bills going up as at the moment they are subsidised by the government and ultimately individual taxation as corporate taxation keeps being cut.

I had never realised about the 100k loss of personal allowance either until i read this thread shamefully since i am an accountant, but it isn't my area! . That seems really ridiculous, it makes the marginal rate of tax for someone earning 100-120k a whopping 62%, but goes back to 42% from 120-150k, before the 45% rate kicks in. Why on earth would you penalise a band of people just because it is a nice round number to set it at. This seems really sly. They should just have been honest about it and made it a separate tax% at 100k.