"Cliff edge for those earning over £100kpa" What does this mean? Is it correct?

[ivs]

I've seen a few posts where people have claimed its not worth getting a payrise after 99k, as you will effectively have a pay cut due to taxes.
Is this correct?

I went on a take home salary calculator (with no additions/changes to the basic set up) and this is what came out?

Are the posters who have made the claim correct? is this wrong?

99k
take home
67,223.40 (5,601.95 monthly)

101k
68,183.40 (5,681,95)

110k
71,603.40 (5966,95)

130k
79,932.40 (6,661.03)

150k
90,532.40 (7,544.37)

Self employed people pay exactly the same amount of tax on profits as employed people do. In reality they are effectively taxed more - if you hit £85,000 turnover you have to start paying VAT too.

Also we pay our own NI, no employers to pay or for us.

Not true. Self employed people don’t have to pay the 15% of employers national insurance that employees do with employees so we make less from self employed people. And VAT is charged to customers not an income tax

Have you ever tried charging customers suddenly a lot more because you’ve had to go VAT registered?

In my industry there’s naff all VAT I can claim back. If I hit the threshold I suddenly need to find an additional £30k income to cover the additional costs. That’s a hell of a lot more work I have to take on, it’s not feasible for many sole traders.

In regards to NI the benefit to the national tax pot isn’t what we are debating here, it’s workers take home, so your point is moot.

Most of them are just lazy or plain crap doctors who weren't up to specialising.

As a hospital doctor I find that incredibly offensive, without GPs the health service would collapse tomorrow, what a nasty ilinformed post.

Pretty sure AlchoholSwab was a sarcastic post.

Sorry if was meant sarcastically, it was early and pre-coffee.

I'm in this bracket and am salary sacrificing to pension to keep below £100K, including any bonus. Not only does this get me out of 60% tax land (I don't earn £150k so sadly I'm in the tapering numbers where paying back personal allowance) but it saves me around £800-900/m nursery fees as I can then claim 30hours funded for DS from September when he turns 3 (can't claim yet for 2 year hours as went over last tax year when 2yr old registration was open).

It's a ridiculous policy to remove both personal allowance (causing the temporary highest tax band available in the UK) and childcare and tax-free childcare all in one hit. Complete disincentive to earn over £100K and all my colleagues also do all they can in terms of pension sacrifice, electric car salary sacrifice, buying additional annual leave via salary sacrifice to remain under the threshold where possible.

FWIW, I'd suck up the temporary 60% tax band if it didn't also cause me to immediately lose all the childcare help. But because of the childcare issue I put it in pension and that means the state coffers essentially lose out on the tax I'd have paid on anything over £100K. I'm not sure how that helps anyone really!

When kids are finished with childcare in a few years and hopefully a few payrises later I might be out of this 60% band and over the hump!

I don't understand why people think it's a bad thing that people are disincentivised from earning over £100,000. That's a ridiculous amount for anyone to earn - nearly three times the average wage, just for one person! What I find more concerning is that anyone is allowed to earn that much. It would be much fairer for anything over £100K to be taken in 100% tax and used to top up low salaries.

I honestly don't know where to start with this vacous comment. This contry depends absolutely on those earning these salaries. Here are a few things to start with.

https://commonslibrary.parliament.uk/research-briefings/cbp-8513/#:~:text=Income%20tax%20payments%20are%20concentrated,60%25%20of%20income%20tax%20receipts.&text=The%20Institute%20for%20Fiscal%20Studies,much%20households%20pay%20in%20tax.

I don't understand why people think it's a bad thing that people are disincentivised from earning over £100,000. That's a ridiculous amount for anyone to earn - nearly three times the average wage, just for one person! What I find more concerning is that anyone is allowed to earn that much. It would be much fairer for anything over £100K to be taken in 100% tax and used to top up low salaries.

🤦‍♀️

The issue is salaries in the UK are pretty crap & there has been little growth. 100k today is about 55k in 2000 and would go a lot further there. Tax free childcare should be universal, so should CB.

https://taxpolicy.org.uk/2024/03/10/infographic_marginal_rates_2024/

These graphs demonstrate it well (may have been shared already)

Thanks for the chart. Sorry but I still struggle to understand what the problem is. Very rich people who earn over £100,000, so in the top 4% of earners, are complaining that they face a marginal tax rate of 62% - not on their whole income but only on the excess over £100,000? But 62% is an absurdly low rate for an excess over such a colossal sum! It means they are keeping 38% of everything they are paid above £100,000, when no-one could possibly need that much. And the even richer on over £125,000 are keeping 53% of everything over that! Even if, as I suggested, taxes on the excess over £100,000 should be put up to 100%, the very rich would still be better off than the other 96% of us, because obviously the rest of us get paid less than £100,000 in the first place - most of us live on a third or so of that. And very rich people then think they are doing the rest of us a favour by paying taxes like everyone else does, only more because obviously they can afford to pay more? Why not just stop taking such an unfair share in the first place? It would be much fairer if everyone was paid the same universal basic income, plus a standard rate for everyone per hour worked. Then everyone could be assured of a basic standard of living, and the incentive to work any more or less would be the same for us all.

It would be much fairer if everyone was paid the same universal basic income, plus a standard rate for everyone per hour worked. Then everyone could be assured of a basic standard of living, and the incentive to work any more or less would be the same for us all.

What would incentivise people to spend years studying and training for careers like medicine, law etc, incurring student debt and then working in a high pressure career where you could be personally responsible for someone's health or freedom, if you would earn the same as someone working in a shop or factory that requires no qualifications, no degree and very little stress?

I enjoy my job, but it can be very stressful, it requires a lot of specialist knowledge and experience, and it's a lot of responsibility. I don't earn £100k (although one day hopefully I will) but even though I enjoy it, if I was going to earn the same regardless of what my job was, I'd definitely opt for something less stressful and mentally taxing.

The Communists tried giving everyone the same income, the USSR collapsed and China went Capitalist but without democracy.

I think from the tax thread - those on over 100k take home similar but the loss of the personal allowance isn’t automatic - ie they have to submit a tax return.

I don’t know if the website you have used has taken this into account or not ?

Well, lots of people spend years studying and training, more than one degree, and then decades working in high pressure and mentally taxing careers where we have a lot of personal responsibility for people, and acquire a wealth of specialist knowledge and experience, without earning even half of £100K, or even wanting to do so. Fpr example, some of us work in education! I do, and what incentivises me is wanting to help people. And if you think working in a shop or a factory involves little stress, try talking to people who work in a shop or a factory. Peace and love to all - I hope everyone has (if you are lucky enough to have today off work) a relaxing Sunday.

You sound delusional.

With every post you sound more delusional. This thread was clearly not for you and your suggestion would never happen in today’s capitalist society suck it up. Nothing stopped you from taking on a career or path that paid more since you were able to acquire all your qualifications.

without earning even half of £100K, or even wanting to do so. Fpr example, some of us work in education! I do, and what incentivises me is wanting to help people

Plenty of people in education earn 50k pls, some earn 100k. They also put more into their pension to bring their salary down.

@Whyisthemoonmadeofgreencheese if your posts are remotely serious I would suggest you go back to pondering about the moon. Or Lord Lucan or something

Try being in Scotland. At 100k you’re taked approx £3k more than if you were in England. And apparently folk at £110k earn less in Scotland than those on £100k in England.

I appreciate it’s a high salary but the marginal tax is pretty brutal and arguably drives jobs south.