Income tax - top 45% rate scrapped! Bonkers!

[HoppingKangaroo]

The 45% top rate of tax (which currently applies on earnings above £150,000) will be scrapped entirely. How will this help the economy? It will just add to the government debt and it just helps out the very weathly.
Why not have more help for the poorest in the country and not have tax cuts for the very wealthy.

Yeah that's why sterling is crashing and Uk government borrowing is at record highs. Because the Uk is heading to be a great place to work.

But it’s true though. The state is literally taking every penny that a higher earner makes for five months labour, and redistributing most of it.

Why are you angry about someone stating the truth like this?

How many months do you think higher earners ought to work for the state before they can point it out?

I honestly think you must be a troll.

If we are ever to turn things around, we have to start by at least recognising the fact that the top 1% are holding much of the country together in terms of tax and spending. You lose them the country is totally ruined.

47%, and not “insane” no, but too high, and it’s right that it is being reduced.

So what?

Why do people keep saying this over and over again. We know that they pay a lot of tax, we get it.

But what's the problem with that? Why on earth would you want them to pay less tax at just the moment when the country is heading into an unprecedented cost of living crisis which will leave many people unable to meet their basic needs. Why would you think that was a good idea? Just why?

And please don't give me the crap about them spending more so that it generates growth that trickles down into the rest of the economy, a) because trickle down economics has been proven not to work and b) because Truss's reckless borrowing will push up interest rates, so the extra will just go straight into people's mortgage payments in many cases.

There was no help for the people at the bottom of the scale in this budget. No help.

Please give me one reason why it was a good idea to borrow massively at this point, not to support the poor and vulnerable, but to cut taxes for the ultra rich.

But how many high earners are paid via PAYE versus limited companies? All the high earners I know socially (outside of the NHS because the government put a stop to most of that) are paid via limited companies and pay barely any tax.

Why are we going to lose them? If our taxes weren't too high before today's budget, why haven't they all gone already?

Has anyone even looked at the economics and stats of this country?
There is a concentrated area of wealth creation, and the rest of the country is largely supported by it.

We are basically going back to a true conservative party, pretty much as Truss promised.

So, here's my take on what's just happened, and it's not about the current crisis - it's about the next one we haven't seen coming yet.

There are plenty of stories reporting that the Bank of England base rate could hit as high as 5.2% next summer. That's around 5% higher than it used to be.

There are plenty of the 45% tax payers who will have decided to pay a high proportion of their income on their mortgage, and live a "normal" middle-ish lifestyle on average levels of disposable income for now. Nice home, but ordinary car/holidays etc. London is full of people like this. A million pound mortgage (a nice family home in a nice area in London, a "special" home in the South East) will rise by around £3-£4k per month under this projection compared to where they started.

A collapse of the property market at this level will create a crash unlike anything we've ever seen before.

This budget is not dealing with the current crisis - they either don't care or we're in so deep that they just can't fix it. It's a pointer to what the next one will be. But they're clearly not telling us that, as that would create panic and precipitate the problem.

I'm not in any sense saying this is right, btw.

And you need to accept that high earners probably aren’t going to feel sorry for low earners either.

If you look at how you talk about us you can’t then expect that we’ll care very much.

OK, fair enough. We have an income around 200 k more than that but we're company directors so no base salary vs bonuses - a quick calculation suggested around £4 million borrowing.

Oh do fuck off!
I work incredibly hard and have achieved success in my career. It just happens to be a public sector 'vocational' career that doesn't pay highly. You must be a troll. Nobody can be so arrogant and lacking in empathy as you.

Labour stamped out the whole paying yourself minimum wage with the rest as a tax free dividends, a long time ago (think it was Gordon Brown - so well over ten years ago).

So how are the people you know doing this? Genuinely curious.

I know many high earners and they are all PAYE.

Thank you good question. They have largely stayed for the outstanding schools, universities, stability and reasonable living standards.

NONE are happy, and have never been happy to pay 45% - it is grotesquely unfair to strip someone of half their salary each month, and it encourages a why bother working hard mentality, and if you consider the huge costs coming down the line for energy etc etc then it is becomes far far less appealing for wealth creators to stay here. A mass exodus of the top 1% due to ridiculous bills and being taxed into oblivion would ruin this country over night.

@Kissingfrogs25

"If we do nothing at all, one might say that is an even bigger gamble. We are then guaranteed to hit the buffers. I am glad someone is finally really grasping the nettle personally. The hot potato has been passed around long enough, time for the grown ups to take over. Yes it is bold. Yes it going to take nerves of steel but the alternative is so bad anyway - I am minded to say what do we have to lose..."

+++

Sometimes when you are in a hole it's a good idea to stop digging.

If we do nothing then yes the UK will be in a recession along with most other world economies albeit a tad worse. It will be shit but we would suck it up just as others countries will have to do.

This is not grasping the nettle this is taking a massive reckless punt that the UK will be able to grow its economy when most other countries are in a recession. Honestly it would make more economic sense and be less risky for Liz Truss to take t£200 billion to Vegas and stick on red or black.

If this gamble by the Government does not pay off then economically the UK is bust.

Liz Truss is not being grown up she is an out of her depth u turning politician that after Cameron, May and Johnson is effectively the Tory D team government.

I'm all for being bold and grasping the nettle on difficult decisions like how to fund the NHS or the pension funding time bomb or even getting a peace deal in Ukraine. But this is pure economic insanity of a double or bust gambler with the odds stacked against them.

You pay less NI but the tax difference is negligible (and there are costs to running a limited company as well and corporation tax)

You can stagger dividend payments and vary pension contributions but you need to be able to not need the cash to do that

You have a very healthy and secure pension mac along with duvet days and the opportunity to scream blue murder at strikes for well paid positions and still be paid. You have in fact a very cosy set up in the public services and take almost no risks - so therefore your salary will reflect that.

I hope you’re right as there needs to be some upside to all this

@Dannexe I’m a hospital consultant and believe you me scrapping the 45% rate is not about doctors pensions.
The amount I contribute from salary as pension is not under my control. Some weird calculation is done to it and then if that is deemed to be over a nominal £40k growth then I will receive a tax bill. This year I owe some tax because I did 6 extra days to fill a gap on one of the weekend emergency rotas due to long term sickness absence. I do not earn £150k and even if I did this wouldn’t change my pension tax bill problem.

So I will not be doing any more extras to “beat the backlog!” and I suspect neither Will thousands of my colleagues

Labour stamped out the whole paying yourself minimum wage with the rest as a tax free dividends, a long time ago (think it was Gordon Brown - so well over ten years ago).
So how are the people you know doing this? Genuinely curious

People with limited companies can choose how much salary they pay through PAYE, how much they take in dividends and how much they invest in company assets.

Abolishing the pension cap would have been more attractive too many PAYE higher earners.

You do realise it's not tax-free over £150k? There's still 40% tax and NI to pay plus losing the tax-free allowance.

The way it's being spun by the media is that it has suddenly become tax-free which isn't the case.

As a PP stated, it's is a small proportion of net contributors who will benefit from this so hardly worth fretting over.

Don't let this divert attention away from the energy crisis...

Ok, fine.
So how many people are actually doing this?

All these high-earners, but also non PAYE, but also don’t need their money, also company directors etc??

What percentage of high earners are paying no, or very little tax via using the above means?