To be fed up with the amount of tax / ni I pay

[Elephantstone1]

although my salary looks decent from the outside. I’m beginning to get really fed up with the amount of tax / ni I pay.

so on £60k end up coming out with just around £3k per month from £5k after all taxes (including council tax) have been paid.

we’re not entitled to any help that others may get

my commute costs about £400 a month, but I’ve already paid tax on that money, so i have to earn about £600 a month to pay for it.

i know I’m lucky to be on a decent salary. Just with the col increasing, I’m getting a bit fed up

As the OP is in Scotland, earning 60k means you are hit with two marginal tax cliff edges- earnings between 43K and 50k are marginally taxed at 42% tax + 12% NI and then your pension deductions/ student loans. Then between 50 and 60k, for example if you have two children the loss of child benefit results in a total 68% marginal tax rate.
Yes, it's a decent salary but at the marginal tax rate meaning you take home only 30-40% of your earnings is it really worth the increased responsibility these jobs usually entail.
I fall into the same threshold, work in a senior role in the health service but I'm no longer covering extra shifts as all that will happen is I take home a tiny fraction of what I've earned and loose child benefit.

Yep, fully agree. I think the first step the country needs to take to start on the road to dealing with the problem is to get rid of all the cliff edges and any "marginal" rate (i.e. either more tax or less benefits) of over 50%. As a finger in the air percentage, I think 50% is enough to pay (or lose) if you do more hours, get a promotion, or an extra shift or whatever. If it's too complicated to change the thresholds/cliff edges, then apply a 50% deduction limit on the payslips so that a worker will ALWAYS take home no less than 50% of the extra gross they'll earn from working those extra hours/shifts or the promotion or whatever. Same with benefits, like tax, we have a ridiculous situation when you can end up losing 70/80% of your benefits when you start working or start working more hours, etc. There needs to be a similar "over-ride" that your benefits will never fall by more than 50% and that includes housing benefit, free prescriptions, council tax relief, even pension credits.

However much I hate Rishi (and the Tories in general), I do find myself agreeing with a strapline they've used, which is "Make Work Pay". We really do have to do that, at ALL levels of income/hours, etc. The ONLY way out of this mess is to get as many people as possible working as much as possible, at all ages, all income levels, all jobs/trades/professions, etc. To do that, we have to remove the disincentives to working more, such as stupidly high marginal tax rates around cliff edges and stupidly high benefit losses around income thresholds for benefits. Let people keep more of the extra that they can earn and they're more likely to think it's worthwhile to do it!

I'd be happy to pay the tax, NI etc - and even pay more of it - if the government would spend it on the NHS, benefits, education.... instead of syphoning it off into their mate's pockets.

@Badbadbunny

You are missing the point. If the business cannot afford it, then employees would still be eligible for state benefits, so no, they would not need to close down.

Im not a business person, or a politician, or an economist, but I'm sure that we can come up with ways of assessing profits/affordability. What I do know is that plenty of companies are making huge profits while expecting taxpayers to pick up the tab for their labour costs. It's a mechanism for funnelling much of the countries wealth to the top.

Large business won't increase their prices if the want to remain competitive.

As a single parent I think you should get double tax free allowance and/or child benefit. It annoyed the hell out of me when I was a single parent that I was penalised. Or we could reintroduce child tax allowance.

You're missing the point that a big business, say a supermarket with 1000 shops IS going to make a huge profit, but if you divide it by 1000, it won't be that much different to a single privately owned convenience store!

At the very least, you have to divide profits by number of outlets and number of staff, and maybe even number of customers, rather than by headline totals. If you divide Tesco's profit by its number of customers, it probably makes less per customer than a typical village Spar shop! So why should Tesco pay their staff more? It's nonsensical.

It's also nonsensical, because if Tesco has to pay £15 per hour by law, how on Earth is the village Spar shop going to find any staff willing to work for £10 per hour minimum wage? They'd all just get jobs at Tesco instead.

There's also the impact of "benefits" to consider, such as a big employer like Tesco will almost certainly provide a better benefits package, such as higher employer pension contributions, better sick pay/maternity pay scheme, more opportunities for training/development, probably even discounted gym membership, private medical insurance, etc etc. All those "extras" have to be factored in too!

I agree, that's another can of worms we need to deal with, along with the crazy removal of child benefit when one household member earns over £50k but no corresponding removal if both members earn £49k. That really was one of the Libdem's more batshit policies in the coalition.

Amazing how we can manage to use "household income" when it comes to benefits, but it's "too complicated" when it comes to tax. Also pretty stupid that tax rules (i.e. over £50k income) are mixed with benefit rules, i.e. the child benefit. Just causes a lot of confusion, unfairness and bureaucracy.

Trouble is, I suppose, that in the 80s, we finally won the fight for "independent taxation" - before then tax was based on household income and both husband and wife income assessed on the husband (though there was an option for independent taxation with less tax allowance, i.e. no married man's allowance). It's going to take one hell of a brave politician to reverse that and go back to tax being based on the couple, rather than individual, which is probably the real answer to the problem.

@MidnightMeltdown I agree and think wages should be higher, with less profits, rather than subsidised. We effectively subsidise shareholders.

UK is an expensive country to live in, even more so, if in the south east. Housing (rent/mortgage), food, transport, household bills - can people actually afford this on an average salary, without benefits, if they have kids? My mortgage alone is £2k p/m, in a very average mid terrace house (3 bed, in a very average area, backing onto a motorway and railway line - smallest bed can literally just fit a single bed in).

Until well into my lifetime (I'm 63) the default was for married couples to be taxed jointly with a tax allowance as a couple and further allowances for children.

You could elect for separate taxation which might be worthwhile where, for example, you were both on good professional incomes.

IIRC it ended because it echoed the principle of wives as subservient to husbands.

I agree though that the Child Benefit loss where only one parent is on over the ceiling, even if the other earns nothing, is a nonsense. My DD works part time in a relatively low paid NHS role on around £25k. Her husband is a Marine Architect who has now edged into Higher Rate tax so their CB is ended/reduced.

What we are seeing play out is a form of wage compression via the tax bands due to higher levels of inflation.

12.57k and below = 0%
12.57k to 50k = 20%
50k to 125k = 40% (recently changed from 150k)
Over 125k = 45%

The banding between 20% (12.57k) and 40% (50k) is far too narrow now, and is now really crushing aspiration (this is a huge problem as it demotivates people from trying to improve their situation in life).

I only really see two options:

1. Adjust the £50k band (40%) to a higher level (£70k to £82k)

This is the simplest thing to do but its unlikely the public finances could take the hit.

1. Do (1) but also add in new bands and reduce tax free amount

10k and below = 0%10k to 40k = 20%40k to 65k = 25%65k to 85k = 30%85k to 150k = 40% Over 150k = 45%

This structure is a bit more complex (NI would have to be simplified), but it would not act as an anchor on aspiration.

You cannot tax your way into prosperity. It just doesn't work as it makes people change their behaviors and become less productive at the margins.

@TheThinkingGoblin

Even worse than that when you factor in National Insurance.

Marginal tax/nic deductions become:-

12.57k and below = 0%
12.57k to 50k = 32%
50k to 125k = 42% (recently changed from 150k)
Over 125k = 47%

So basically, ignoring under £12.5k, combined IT/nic tax rates only changes between 32% and 47%.

We should have a much broader range of tax/nic %age. We need a lower/starting rate at the very least, so that those earning lower levels, certainly under average wages aren't paying so much tax/nic. So maybe a new band with a tax/nic rate of 22% on earnings between £12.5k and maybe £27.5k.

But then again, on wages around £27k (I think) the student loan repayments come in, so you'd be jumping from 22% to 41% (32% plus 9% SL). which is, in my opinion, already too high for people only just earning over the average wage! Then 51% for earnings over £50k which I think is too high as there should be a cut off limit of 50%!

It's NIC which is the killer. Of course, that's where "tax rises" have been targeted by both Labour (Brown and Blair) and now the Tories (Rishi) whilst leaving income tax rates unchanged. Though Brown did have a "moment" in the early noughties when he brought in a 10% IT rate, but he soon scrapped it again! And of course, student loan repayments are just another "tax". I wish they'd be honest and scrap NIC and student loans and just have a more sensible range of income tax rates applying to ALL income, not just these relatively new "taxes on wages" that leave all other forms of income without any tax rises for the past 25 years at a time when workers have been royally screwed.

Brown did have a "moment" in the early noughties when he brought in a 10% IT rate, but he soon scrapped it again!

He scrapped it to reduce the basic rate from 22% to 20%, admitting that it was a mistake in the first place.

Wage compression via tax bands is exactly what's happening.

Regardless of whether one thinks this is a good or a bad thing, it's a new thing. The goalposts are being moved, meaning more people are going to be in situations where they face high marginal tax rates.

For that reason, it's worth thinking critically about how people are going to respond to that and whether we're sure we're willing to accept the negatives as well as the positives. None of the people who have been talking about selfishness etc have clarified whether they're willing to miss out on services or expertise that they need as a result of people responding to tax policy, and to what extent.

At the risk of being eviscerated here, and having worked hard as small-time entrepreneurs and enjoying a moderate level of success, at 67 my DH is so hacked off with the UK and its politics and population that he would live almost anywhere he can chat to the waiter as he asks for a cup of coffee and some cool water. From Thailand to Timbuktu. I don't think we are that rare as a demographic group; we went overseas to earn in the 70s,80s, and 90s, banked cash, bought property. Before the internet conected the world, many of these places were remote to the point of being isolated. Dubai was mostly a sandpit when he went there the first time.

However, if UK tax regime ends up stacked against the moderately successful, then we will go elsewhere. Wills will be rewritten accordingly.

As we see things right now, we have a choice between learning another European language or moving to the Orient, where most people learn English as their first foreign language, and modest competence in English is routine. I would prefer Europe, but DH loves Asia having spent many years there from infancy.

Low earners should have had the sense to realise they were never going to have a life of luxury and always going to struggle financially. They could accept that, or they could take steps to improve their lot, by taking a second job, getting further qualifications, working towards promotions, working longer hours, etc.

We do actually need people doing shit jobs on minimum wage. So even if one individual manages to break free, we'll need someone else to step in to do the job. So there will still be the problem of people who haven't been able to save for pensions.

Likewise almost all company structures are pyyramids - lots of jobs at the bottom, fewer team leaders, even fewer managers. Only a small proportion of those on the lowest levels are needed to fill the level above.

It's very reassuring to say "we don't need to make provision for the poorest, because their poverty is a result of their bad choices", but there will always be people at the lowest levels, that's how our society works.

Incidentally, taking a second job is difficult for those on minimum wage since it is likely to lead to the loss of the first job - not directly, but because the employer requires you to be able to work on any day and at short notice. If you can't, you'll get fewer hours assigned to you, right down to your contract minimum which could be 0.

If people worked closer to full time hours, then that would also help the labour shortages in the sectors you mention. In many industries, employers deliberately have contracts of 20 or fewer hours a week as a way of managing peaks and troughs. Pay as little as possible during quiet times and ramp up the hours hugely during busier times. And I've already explained why it is hard to manage 2 limited hours jobs simultaneously.

What we can do is make pensioners pay more in because of their healthcare costs. A pensioner is simply someone of your age in a few years time. Makes more sense to pay in more when you're in your peak earning years rather than pay more in once your income has dropped to half (or less).

Incorrect.

You are forgetting that the ratio of working folks to retired folks right now went from 5:1 to 3:1, and is actually getting even worse.

We have reached the end of the line in the UK.

So, like the US we need to ask the pensioners to pay in more to subsidise their extremely expensive healthcare.

If you do not do this, what will happen is those same pensioners will have to pay for their healthcare privately.

And then, good luck to them. They will be paying 5x to 10x more.

If the pensioners are anything like my parents, they’ll say “fuck off and we’re not voting for you”.

They’ve “paid in all their lives” (my mum worked 15 years, my dad 34) and retired at 55 after selling their house, bought for peanuts, for over a million. I’d expect them both to get to their 80s because both their sets of parents did, meaning my mum will have been retired twice as long as she worked and my dad the same length. Their joint income is absolutely insane, but any suggestion that they pay more causes apoplectic outrage.

They maintain that it’s the job of the young to support them like they did their parents, and if we all stop eating avocado toast then we should have no bother with it.

They’re dreadful in many ways (alcoholic abusers) but they’re not alone in thinking as they do. They have a whole cohort of retirees who meet up and talk crap about the young.

Agreed.

The level of entitlement amongst the old in the UK is absolutely off the scale. I have lived in six developed countries, and none of them hold a candle to the UK. It is shocking really.

Thats why (in my view) this only ends with a politician getting rid of the UKs first past the post voting system.

When that happens, the older folks in the UK will go back to being a minority, and we can actually start to make decisions for the improvement of the country as a whole.

Until then, I fully expect the pensioners in the UK to keep demanding that the taxpayer completely subsidise their lifestyles.

They have shown us who they are, so there are no excuses left now.

@TheThinkingGoblin, except that they won't behave as you expect. MY MIL might have, but she was 93 and demented before she died. DH and I are 66, and are much more likely to retire overseas.

Happy to pay tax due, and health insurance costs etc, but a nicer climate will keep us in good health for a lot longer. Even in other European countries, the cost of living is lower. Portugal, for example, is about 25% cheaper than the UK.

Well said

For those of you that are now fully depressed at all this.

The NHS does run a pretty smooth service for repeat antidepressants. Can be all done on an App and delivered straight to you door. It's timely and cost £9.65 for two months supply.

In a society like ours It's no wonder they have this nailed on.

Low earners should have had the sense to realise they were never going to have a life of luxury and always going to struggle financially.

FIL was a bricklayer. He left school at 14/15 with no qualifications. DH recalls he was always working evenings and weekends to make ends meet. If he and MIL lived a hand to mouth existence as it was, when do you think he had the time and energy to take a third job or gain extra qualifications? As for promotion - to what?

If all bricklayers had quit to look for better paid jobs, who would have built the houses, factories, power stations, etc?

So now, the entire country is being asked to heavily subsidise a group of pensioners that decided not to save for retirement because the state would step in.

Alternatively, society could have paid them a decent wage, enough to live on - but that would have materially increased the prices of food, houses, social care, public/NHS services (like refuse collection, cleaners, porters), etc.

Its swings and roundabouts - businesses pay people double, to enable them to make their own pension provisions and you pay for it through higher prices; or pay them shit wages to keep prices for you down for now, but accept you have to keep them in old age.

There’s no such thing as a free lunch!