To think high marginal tax rates should of been the priority

[Pip47]

Does anyone else feel that it would have been much fairer and a better boost to productivity if the lower threshold had been increased, even slightly. In addition the astronomical marginal rates of tax those with children and or student loans end up paying when they go over 50k. Who can really get excited about a 2% NI cut but no doubt will cost the country billions

@Plankingplanks If you earn over £100,000, the personal allowance of £12,570 will be reduced by £1 for every £2 earned over the £100,000 limit. If you earn £125,000, you pay Income Tax on everything and there’s no tax-free allowance.

Exactly. It doesn't make sense to earn over 50 whereas 2 people could earn 25 each and still take home more and get child benefit.
I've never understood their point. 2 people earn 49k and claim cb but if one goes over 51k it tapers off..

As the focus seems to be on getting people to work, they probably didn’t want to do anything that would aid those that don’t. Reducing NI benefits workers.

I think you’ve completely missed my point, I’m talking about marginal pinch points that penalise people heavily if they increase their earnings

@Plankingplanks once you earn over £125k, you don’t get any personal allowance at all. Everything you earn is taxed, it’s what causes the 60% marginal tax rate between £100k-£125k and why many doctors/dentists etc choose to work part time, to keep their earnings just below £100k. You get absolutely clobbered for tax between £100k-£125k.

Yes, it gets reduced but you don't pay 60% tax on the full £125k. And you can reduce your income by paying pension etc on this. You do you still get a personal tax allowance, it is just reduced if you earn between £100k-£125k. If you earn over that yoh are still entitled to a tax allowance if you reduce your income below that amount.

I can't get too upset by people earning over £125k who don't get to see their tax allowance.

Hilarious thing to say, nothing like envy, like they'd turn the wage down if it was offered.

The marginal loss can be even higher if losing the funded childcare hours too. I think the point is that is it fair to tax someone at that rate when the headline tax figure is significantly lower. Is that just, particularly given that it disproportionately affects only certain groups of people (ironically those with children and thus greater outgoings in the first place). Plus your overall rate or tax can end up higher than someone who is on 150k+
How fair and good for the economy is it also to be saying to people if you earn e.g between 50-70k or 100-125k we’re going to penalise you so much that it’s virtually not worth you working. I know doctors and nurses who would happily go and do some voluntary work but understandably don’t want to do paid work where virtually all the extra income (minus what they probably spend in commuting etc) gets clawed back in tax but would be quite happy if only being charged the headline 40-45%

government petition with this in mind. The marginal tax rate that kicks in at 50k if you have kids is appalling and even worse in a single income family

https://petition.parliament.uk/petitions/639443

Don’t forget if you’ve got a student loan you’re also losing another 10%.

People shit on bankers and their bonuses, but when they tell you your number you have to divide it by at least two. A huge chunk is going straight to the Exchequer.

People forget that these are all relatively new things though, when I had my children I learnt £40k and wasn't entitled to a penny of help from the government. They have to cut off somewhere. Arguably it should be sooner than £100k!

*earned. Bloody autocorrect.

Also if you earn £100k plus then you will pay off your student loan pretty damn quickly.

having big cliff edges, regardless of where they occur, is a problem in that you are creating disincentives for work. No one is implying that people will turn down pay rises that take them over the threshold (£50k or £100k). What does happen though, is people reconsider the benefits of working full time or over time - when you can work 4 days instead of 5 and get virtually the same take home. However you feel about people on £100k+ salaries, it is a negative for the country when people are disincentivised from working, not just for the additional tax revenue, but more importantly for the resulting economic growth.

I am self employed, and actively push back on new work when I start to get close to £100k (plus pension), as it is extra work/stress/time away from family for significantly less money in my pocket incrementally. If there wasn’t a cliff edge I would be more tempted to take on the work, increasing my total tax bill and providing my subcontractors with more work opportunities

Yup. I could earn over £100k. Choose not to due to tax rate. Instead I work PT and if I go over £100k anyway I'd put more into pension.
Did the same when I was at the £50k threshold.

I earn just shy of £100k. This tax year, I'll be just over having done a little overtime. Some will go into pension, and I won't do more OT because of the financial implications.

We have never received the financial benefit of child benefit because of my salary. We are one of those single income families that receive nothing, when two parents earning what I do together get the full child benefit amount.
DH isn't able to work due to ill health, so I'm often caring for him as well as DC, while working full time and paying for childcare. Because of this, we need all the money I earn, and things like tax free childcare help. Losing this and some tax free allowance is a big deal.
It's not all rosy for everyone in "the top 10%', though admittedly it would be tougher if I were on a lower salary.

I can't get too upset by people earning over £125k who don't get to see their tax allowance.

Maybe you can get more upset when people who are clearly skilled or in demand enough to earn such figures (e.g. surgeons or anaesthetists) reduce their hours to stay under the onerous tax brackets. It doesn’t matter if the earn more than you, there’s probably a reason for that and discouraging them from working reduces the value obtained in our society. If you really wanted to tax the rich there’d be a high tax band at say 500k plus where it’s almost entirely finance people.