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.

Daisy we looked into that but it wasn't that easy and you were no better off(money in your pocket wise) now,the time we actually need it having 3 kids to feed and provide for.

As an aside my partner I'm not even married to going through the hassle of having to fill out tax returns for money that isn't even his is frankly bonkers and must cost the gov money though processing.

Another really crap idea from the Condems- to go with free food and childcare for wealthier families.Makes me laugh that these oh so rich over £41k families seem to be needy of free food and childcare. Those on joint £80k with 2 x tax thresholds to boot on top will even keep their CB too.

They need to make their minds up as to what "wealthy"is, include all household income and benefits and stick to it.

Child benefit for two people earning 80k is wrong. If an individual earns 80k and the husband/wife is a sahp then they take home less money so why do a couple still get it? Either stop for both scenarios or don't penalise lone parents/sahp. In an abusive relationship cb may be the only source of income a parent has, that is why it was introduced to the be paid to the mother by beveridge in post war Britain.

The fact self employed can offset so much in tax and do cash in hand is very wrong. Why should a self employed person on 50k get to hide so much of their income, when an employed person just has to pay. Part of my job involves self employed accounts, it is amazing how many people now want to declare the correct figures to the tax man, as their bank requires a decent income to obtain a mortgage!

I would love to know what impact the banning of self cert mortgages has had on the governments tax revenue.

Drives me mad that for tax and benefit system I am lumped in with Dp and considered a couple but for inheritance etc I am not

How much "government income" is generated through personal taxation and NIC's? ie how much do they lose/gain by making some of the changes suggested above?

National insurance drops around the point HRT kicks in. Would people be happier with a HRT of 30%, and NIC's to continue at 9%?

Why do we need to keep NI and tax separate? Is it to do with employers contributions?

I agree with simplification of the system - tax, NI and benefits.
How to do it tho? Whatever you do, some people will benefit, and some will loose out. Depending on how loud the losers shout will affect the outcome! I think I'd like higher tax free allowances, and massive simplification of the benefits system - there are so many different elements. Hopefully this would then generate savings on the administration side of things??? I suspect tax on higher earners would then need to rise. I've no ideas of the implication of the above tho.

yanbu, the rate is far too low.

If the rate was linked to inflation it would be 75k. If I get a wage raise (big if BTW) I shall reduce my working hours.

For those working just over the limit, it is particularly . It isn't a huge wage and we are paying a disproportionate % of tax.

A huge amount of the income the state generates is from tax payers and their employers paying NI and income tax. I think most of it. That is the trouble. There are very few very rich people so even taking 100% of what they earn would not make a huge impact. It is the huge state and its wasted costs and also the complex system which needs to change.

As for child benefit originally it was a child tax allowance which went to the higher earner in the couple years ago. That did not benefit the poor and also meant in some couples the husband did not give the wife any money if she did not work and she and the children did not have enough food. So CB came in to give money into the hands of the non working wife including some rich men's wives where the rich man also chose not to pay any money to his non working wife. It was also paid to all as universal to ensure those better off continue to believe in the welfare state. That is what they are currently breaking. My brother,. sister and I who all support or families on one wage have all lost all our children benefit. As I have never had maternity pay rights, never had child tax credit, never had a childcare voucher child benefit was just about the only thing I ever had which made me think - okay I will be in that 1% who contribute 30% of this nation's income. Now that has gone I don't feel like that and my brother has set up a company for some of his earnings lawfully to reduce what he pays in tax. In other words removing the child benefit for the better off and with about half our income stolen by the state in tax they have lost the goodwill of many of the middle and higher earners - that compact between tax payer and citizen has been destroyed which has consequences mostly for the less well off as less tax is then generated to feed them.

Self employed - don't please generalise. there are legions of them out there who do pay every single penny of tax. I always have. My father always did. I would say most of them do. That does not mean the calculation is simple. I buy the FT every day. HMRC says that is for business purposes. I buy the Times - is that in the same category. We have to make these judgments on every single bit of expense every single day which relates to work, instead of having a simple easy system. Is that expense wholly and exclusively for work or not is the test. I sometimes think PAYE tax payers think all self employed people are dodging the system. Instead we do our best, many of us, to pay what is due. There is a myth that our turnover (receipts) is our profit including when that is applied to companies. I never understnad that. if I buy goods for £100 and sell them for £101 I am keeping £1 and I am taxed on £1. That does not mean I am tax dodging tax on £100. Yet the press continually suggests your turnover/receipts is somehow what you should be taxed on!
Someone asked about NI and tax. I believe the Government recently announced a plan to consider merging them but protecting pensioners (pensioners do not pay NI on their pensions or their investment income (no one does) so if there is a merged rate of tax and NI at say 33% (current tax and NI combined at basic rate) then pensioners' pensions might then be taxed at 33% not 20% (although a good few earn enough to pay 40% tax already on their pension as my father did in the 2 years he drew it before he died). Pensioners are worried about this consequence of the merger. I personally would prefer a tax rise for some coupled with simplicity for all although this proposal is just a merger of tax and NI. It is NOT a flat tax at 33% and the rate is not yet set. There would still be the higher rates of 40 and 45% tax (42%/47% when NI is added in).

Taxation in this country is very high compared with many other jurisdictions. To state the obvious, it is not only income tax, but NI, CGT, VAT, council tax, road tax, stamp duty - a huge proportion of most people's income - and then, having paid substantial taxes all their lives, another slab of income is taken away from their estate upon death by way of Inheritance Tax at a whopping 40% (most homes in London and the South East will be above the threshold, even without factoring in other assets). Even tertiary education, which used to be free, involves most students taking out crippling loans, which they pay back out of their tax - effectively a tax on higher education.

I think I am right in saying that countries which have lower overall tax rates actually collect more tax, because taxpayers consider it to be fair and don't take steps to avoid it. As others have said above, higher taxes do not proved any incentive for people to work harder, quite the contrary.

I am no great fan of Shiny Dave, but God help us if Ed gets in next year, with his promise of 'mansion' taxes etc (a 'mansion' being an ordinary terrace in Islington, for example; perhaps the occupants should boost their income by selling tickets for a tour of the home and gardens!).

Many of the wealthy French who came to flee Hollande, will be leaving, along with their contribution to the economy, and there will be other groups too.

"I think I am right in saying that countries which have lower overall tax rates actually collect more tax"

I think you're not. Are you referring to the highly theoretical Laffer curve, that is most likely to kick in (if at all) at around 90% tax?

Frankly, I'm sick of the constant propaganda from the wealthy (and, yes, £40k is wealthy), trying to normalise the idea that the more money you have, the more negotiable your tax is... everyone's attention is directed away, with regular Two Minute Hates of some poor bugger scamming £70 a week, but if you want the people who can actually afford it to contribute it's "Oh no, it wont work, we wont pay, we'll just avoid it" and somehow that's acceptable? If anyone has the temerity to question this arrangement, just bandy around hollow, empty, meaningless words like 'wealth creators', 'trickle down', 'politics of envy' and go back to making the poor suffer, which is fine, cos they have no voice.

YANBU and the CB bollocks policy stinks!

This is an excellent article showing that no matter how you all think the rich pay more tax, the tax burden falls disproportionately upon the poor. Tax isn't about punishing people for earning more, it provides a safety net for all of us, and is about forming a better and more fair society.

Guardian article

CB bollocks policy is just that - it is typical of knee-jerk government big-wigs creating policy 'on the fly' with not the foggiest idea about how it plays out in real-life to the people who need the CB money.

I wonder what would happen if you just tip-over over the earnings threshold for CB (maybe you get a payrise) but don't say anything. Do they have enough resource to chase up each and every person?

I keep hearing they are so stretched that they have to prioritise their "battles" and by the time they catch up with someone just over the threshold, their children will have grown up and left home

I really don't feel comfortable about the generalised vilification of "the wealthy". Just because people have money, doesn't mean they should be automatically be characterised into one homogenous blob.

I'm not going down the rocky road of "those people work hard for their 40K", but more the association that it's a crime to earn a decent wage.

Just saying....

daisychain, HMRC never bothered to write to Dh when they had apparently written to all higher rate tax payers claiming CB. He still registered for self-assessment though as he didn't want to be fined. He asked me how much CB I had claimed for the previous tax year and I sat down and went through all my bank statements to determine the amount. He entered this value on his self-assessment form and then, a few weeks later, I found a calculation on the HMRC website which said exactly how much CB a family with 3 dc would have received for the previous tax year. I realised that my calculation was out by about £80 for some reason. We panicked and dh phoned HMRC and told a lady that he thought we'd not declared enough CB on his self-assessment and asked her what he should do. She told him not to worry and that they were just grateful that he had bothered to declare it at all! I wonder whether we shouldn't have bother after all

Sorry, forgot to say that the lady in question at HMRC even told dh that the whole CB thing was a complete nightmare for them!

Atarpo, thanks for the Guardian link and the report by the 'thinktank' although having read the article, its provenance is unclear.

However, it is correct that everybody pays substantial taxes through indirect taxes such as VAT, as the article points out, which was the point I was trying to make; obviously not very well, given the responses of several posters following!

Most of us are taxed very highly, regardless of income. Do we get value for money? that's a whole other thread!

I'm self employed but the only things that are tax deductible are things I use for my profession? Eg: books, stationery, professional membership, travelling to meetings? All things I wouldn't need/have if I wasn't practising. If I was employed my employer would pay for these? They'd also pay for holiday, bank holidays, possibly other benefits and I might be entitled to childcare vouchers which self employed people aren't. Self employed is lose lose for me.

Of course we don't get value for money. The state never does much which is any good which is why having its size and cost whilst reducing us all to a flat rate 33% Tax/NI and CGT would be a good start.

And yes HMRC do check tax returns submitted for those who use self assessment and if you do not declare the child benefit/children on there you would commit a criminal offence. I do not think people are illegally evading it. It would be too risky. HMRC have never recovered as much tax as they have in the last 12 months.

Yanbu

YANBU I've been a higher rate taxpayer for years. My salary was effectively frozen for a couple of years (until I moved company) and I saw a real decrease in our spending power.

Now for me, this is not a huge issue as our household income would, I suppose be considered reasonably large. That said, if I had been supporting a family / single parent on my income I would have really felt the squeeze. We had no HP, car payments or any other debts other than mortgage, which is just as well.

I don't think the current regime is fair. The child benefit rules are demonstrably unfair (I have no DC and wouldn't receive it if I did, so no axe to grind there, but I have mates who don't receive it who are single income just over the threshold and watching the pennies).

The super-rich get a great deal of mileage out of the fact that rhetoric often targets the top '10%'. If you look at the figures, the person and 70% is close to 95% than the person at 95% is to the 1%....