To think that the tax system for lower earners is ridiculous...

[Startingagainandagain]

I was thinking about that this morning after the organisation I work for announced pay rises levels for this year.

I am disabled, work part-time because of it (so no choice) and don't claim any benefits.

My pay rise is 4.6 % which sounds great but equals to very little extra each month once tax/national insurance is taken out...I will be maybe £20 better off.

There are many people in the organisation who make less than I do (my salary is around 26.8K which for a part-time role is not bad and will go up with the pay rise)

Am I wrong in thinking that the tax burden should not be that high on people who bring that sort of salaries home?

It seems to me that the tax system is hammering the lower paid and brings a vicious circle of people then having to claim benefits, even if they have a job, to have any kind of decent life.

Do we think the next government should address this?

Really? So you're still coming out with a fairly decent wage.

It's always the same.. you clearly chose to be disabled, work part time, etc etc 🙄🙄🙄

@ruby1957

'Not necessarily true - some lower earners (those you seem to dismiss as earning less than £50K) are not and never will be entitled to benefits which are largely aimed at couples and families '

Exactly!

Most benefits will go to people who have kids and who have a very low income or who are unemployed.

The people who can't catch a break are the ones who don't qualify for these benefits, have a job which is not well paid and end up left with very little money to live on every month while comparatively paying a lot of tax on that small income.

Have you any idea what basic housing costs are in this country? Work in any big city and you’ll either have to stump up extortionate amounts to live near work, or live a bit out and pay high amounts to house yourself and extortionate amounts to travel to work. Then try throwing in childcare cost.

the only people surviving on low salaries are those living outwith big cities or those with other means of support (benefits / family money etc). £50k is scraping by for many people in this country. That’s what’s wrong with the UK today.

Absolutely!

There is only so far that income from work can be squeezed.

But the person on £55k won't be getting a £100 pay rise will they, they will be getting almost double that and the person on £100k will be getting double that again. Yes they might pay more tax but they will still be left with loads more disposable income.
Percentage pay rises are a scourge on society and mean that the rich always get richer and the poor stay poor.
I am not a socialist or a liberal, I am a conservative voting capital former banker but can't find any fairness in percentage pay rises at all.

Indeed.

My childcare costs for one child are more than OP’s entire take home pay.

Wages in this country bear increasing little resemblance to the cost of living!

According to my P60 I paid just under £35,000 in the last tax year. When I look at Public Expenditure data I can see tax payers are primarily paying towards Health, Welfare and National Debt interest (over 50% of tax income goes towards these three categories). I think I've visited a hospital once since I had DS 9 years ago and the last time I called an ambulance for my dad I was told to drive him in myself as none were available. I've never claimed benefits including CB for either of my DC. Whatever national debt was run up, I don't know how it benefited me.

But it is what it is. Taxes and death are the only certainties in life. I completely agreee that the burden on the lower paid as a % of their income is higher because of the COL crisis. However, and I know this opinion is widely criticised on MN, higher earners are also struggling in this crisis. High income does not = an extravagant lifestyle and loads of spare cash particularly if you are paying out ££££ in housing costs and childcare.

Absolutely this.

I’d love to know what those who think that high earners should pay more think is a reasonable amount for those high earners to pay? Cause here in Scotland every time they do a budget they increase the percentage high earners have to pay. They say ‘oh it’s only fair and reasonable that high earners pay X amount’ one year, for the ‘only fair and reasonable’ amount to be a higher rate the next year. When will it stop? It seems to be they are taking our wages at an ever increasing amount.

I don’t mind paying taxes but what I pay never seems to be enough to satisfy the socialists / Scottish greens and it just seems greedy.

In just about every pay rise recently, lower earners have received far higher percentage pay rises than higher earners. Eg the pay rise has often been something like a flat £2k pa, which is early 10% to lower earners, but only 3/4% to high earners. The NMW has gone up by about 20% in the last two years.

This has led to been a knock on effect where people on slightly above NMW have been 'caught up' by the NMW to the extent that they don't earn any more for having more responsibility or qualifications.

Plus the argument about paying 'comparatively a lot of tax' is nonsense.

If you earn £25k and pay 5% in pension contributions, you pay just over £3.2k in tax and NI or about 13% tax overall

If you earn £50k and pay 5% in pension contributions, you pay nearly £10k in tax and NI, so 20% tax overall, plus you might have to pay another £2k pa in student loan repayments.

And it’s coming from all sides.

From the government deductions through PAYE / employer costs have increased massively in recent years:

• student loan repayments
• auto-enrolment
• freezing of thresholds
• The cost to employers of employing people - employers NI, employers pension etc

Meanwhile the cost of living spirals:

• Housing - need I say more
• Childcare
• Food
• Travel

Wages have meanwhile broadly been flat.

It’s creating a difficult situation whereby workers just cannot keep up with the cost of living despite being on ostensibly good salaries.

And yet public services are terrible, everyone’s pissed off, no clear initiative to improve anything - where’s all the money going?!

@AllyCart
Your estimates are not realistic. Across the board COL pay rises are always a fixed % of salary per employee, they aren’t a fixed £ amount per employee. So to get an idea of what the OP means, you need to apply the 4.6% pay rise to each salary:

OP will be £70/mo better off

A person on £55k getting the same 4.6% pay rise will be £122/mo better off

A person on £100k getting the same 4.6% pay rise will be £182/mo better off

Higher earners will still have more than enough left for a good life/saving after they pay tax/NI

Unless you're going for socialism, or communism, high earner will always have more left. And this is the issue partly, the increasing gap between the higher paid and the lower paid. Not the fact that some people are paid well.

Lower paid people might pay lower income tax but they are proportionally taxed a lot because ALL their income is spent and a lot of that spending is taxed. Whereas rich people can save, and make money on the savings, a lot of which are tax free or tax avoidance. With a good accountant, you can avoid a lot of tax.

The real solution would be to tackle the commodification of housing, the CoL, basic services and rejoin the EU. Make expenses less eye-watering.

Most professionals on furlough during Covid benefited massively and that program is one of the key drivers of our current national debt. Not saying you benefited but you may have.

Across the board COL pay rises are always a fixed % of salary per employee, they aren’t a fixed £ amount per employee

Not true. The NMW has gone up by over 20% in 2 years. Most higher earners won't have received anything like this as a percentage.
Many employers including NHS and Civil Service have awarded a fixed amount element as part of pay rises so lower earners benefit more.
The recent cuts in NI have only benefited the portion of salary up to £50k so doesn't apply to all of salary for higher earners.

I'm not against favouring lower earners when setting pay rises, I agree with it, but it's disingenuous to base your argument on this not being the case.

In the company I work for the only people to get any pay rise whatsoever were the lowest paid 20%. Everyone else got nothing.

Percentage pay rises may be a thing in the public sector, but not everyone works in the public sector.

Yes but how much more do you think we should pay?

You get a 4.6% pay rise and receive 72% of that.
I get 38% of it.

Much more tax and I’d be better off cutting my working hours by 5% for the same pay.

Which professionals were on furlough? Lawyers / accountants / doctors / engineers were all working. I’d love to see furlough stats but I’d imagine it would be wedding industry, pubs and cafes etc, hotels and b&bs and trades which were on furlough, not professionals.

The COL pay rise at my company was a flat £4k for everyone.

It is true.

The increase in NMW is not an employer, company wide COL pay rise.

NMW is a government mandated minimum wage. Its increase is independent of employers internal decisions.

Some trade/civil service unions do negotiate pay rises that have a fixed element to it instead of a blanket % increase.

But again, government mandated and union negotiated pay rises are not company wide COL pay rises

Well, obviously OP’s company did it by a flat %, not a flat £ per her OP.

A company won’t do a % for some employees and a £ for others- they always do one or the other.

I don't know of any professionals who were furloughed during Covid. Most can do their jobs from home or, in the case of medical professionals, were essential and kept working.

I think the main beneficiaries of the furlough programme were lower paid workers in the service/hospitality industry.

The problem is that tax bands are frozen and haven't risen with inflation as they should have done, so we are all paying too much tax.

I'm in the 40% tax bracket which is even worse!

People like me with ordinary jobs, are now finding themselves in the higher rate tax bracket - we are ones who are really being hammered.

I think it’s the opposite! I think after you take into consideration taxes paid, benefits received (or not), access to free childcare etc I think you’d be surprised how little the gap is between those earning £30k and those earning £50k. And those on the higher salary have probably worked hard to get qualifications to deserve that higher salary.

The answers to poor public services do not lie in taxing high paid earners more, the answer lies in making all UK residents pay more (increasing the basic rate of tax, cutting the triple lock, taxing dividend and other earnings at the same rate as income tax etc).