October budget going to be painful

[increasinglyconcerned]

Here we go..... I knew it. Labour were promising not to hike our taxes in the election campaign and here we are.... apparently they discovered £22 billion black hole in his first weeks in the role and it's not his fault.

Let me guess, those of us who earn six figures and already pay 45% will pay EVEN more and take home even less. It's the hard workers who will take the brunt. What's the point in working anymore!

I earn a little over £120k and I'm taxed the same as those earrings £500k.

Before people jump in saying they don't feel sorry for me, I work full time to support my family, as of January I will have 2 DCs in nursery, plus my mortgage and get ZERO free hours childcare, whilst they keep promising free childcare but I just pay more for everyone else to benefit.

I cannot afford to pay more taxes to fix this country and especially when so many people are getting a free ride and not paying their way, ranging from millionaires with tax havens to those claiming benefits dishonestly.

Yes exactly.

Well they have cancelled sunak's £40 m helicopter contract

This 🖕
There won't be a rise in income tax. Your salary over the threshold will be still be taxed at 45% .....(you make it sound as though you're paying 45% tax on all your earnings btw. Which of course is not true)
You'll probably lose some pension tax relief and inheritance taxes will change.
I think she'll recalculate what counts as national debt too (which she should as she of our accounting principles really don't help us) and change the fiscal rules to allow us to borrow to invest (a good thing).
You wouldn't have been reading the telegraph by any chance, they seem intent on telling their readers that Starmer and Reeves are 'coming for them'....

Cry me a river. I am an unpaid carer caring about 80 hours per week for two disabled family members. I get £81 per week. I am not sure what to say for someone working less hours and taking home almost 30000 as much. 🤷

Bu that's a comparison of public vs private which isn't under review for change - and whilst I cannot speak for all industries every time I have looked at public sector IT jobs I found them way underpaid compared to what I earn in the private sector. The pension is always tempting but the total renumeration is never worth it - so I've never made the jump.

What they are talking about is lower and higher rate tax payers getting equal tax relief (e.g. both getting 20% or 30%). It will hurt me personally a great deal as I get that 40% tax relief but, as I say, it's a move I find hard to think of as unfair and so would accept it.

FWIW I'd also support a higher mandatory minimum employer contribution. 3% is shockingly low (I only get 4%) and I genuinely think the mandatory min should be higher.

We all work hard. None of us hard workers can afford to pay even more tax.

What would your solution be? Those of us in the squeezed middle who earn less than you but still qualify for no assistance except maybe (at the lower end) a few free hours childcare (now, a year ago we wouldn't have) get taxed more instead? Become more squeezed?

Something needs to be done. Tax isn't necessarily the right way, but it's also not necessarily the wrong way.

Any earnings over £125,140 are taxed at 45%.

Earnings from £50,271 to £125,140 are taxed at 40%.

@cosyleafcafe see I think the difference between £50k and £125k is far too big to be on the same tax bracket, same with the 45% rate. If I was earning £52k a year it would piss me off to pay the same percentage rate of tax as someone who earns £124k a year. So that's why I say it should be staggered more gently.

Equalising tax relief on pensions effectively means higher and additional rate tax payers give money to lower rate tax payers to fund their pensions. I don’t think that is fair and will have a catastrophic impact on contributions as 30% tax relief on input will attract at least 20% tax charge on withdrawal so not at all attractive.

Capital gains increases in many cases just taxes people on inflationary growth not real asset value increases. Significant changes will simply mean people will hold onto assets until there is a change in government and likely reversion of the policy.

IHT if made more onerous will just lead to more rigorous planning to avoid it. I’ll make sure all my assets are in my DS name way before it becomes an issue. The only people it will impact are those with no children but they’ll just spend it anyway.

Exactly this

They don't have to raise income tax to raise people's tax burden. They can raise tax from all kinds of sources:

• VAT
• Capital gains
• NI
• Council tax
• IHT
• and on and on ....

That’s incorrect.

Earnings between 100k and 125k are taxed at 60% due to loss of personal allowance.

This is halfway to being my point. Posters like OP always vaguely threaten that they’ll one day just quit their jobs rather than continue to pay tax at the higher rate, but they never do because in reality there are lots of reasons (including, obviously and predominately, financial) why people benefit from being in highly paid careers and very few people are actually sufficiently disincentivised by taxation to leave them.

Your silly, sixth-form essay level comments about Labour ideology obviously don’t merit response, and in any event I’m not a Labour member or voter so feel no compulsion to defend them.

I don't feel sorry for someone earning £120k when working full time for minimum wage is under £24k. Someone on 500k is going to be paying more tax than you even at the same percentage. You aren't hard done by.

Some of us not working are caring. I'd happily got back to my corporate job. But my disabled son would need residential school at about 75k a year. I'm never going to be earning to pay 75k tax a year. Overall NET, you don't want me working tbh. Part time increasing hours can push you into higher childcare costs too.

What would have helped stay in work would have therapy for my child before school. He only started speech therapy at 5 and he was non verbal. I hope some of the tax goes on proactive rather than 'shits hit the fan' reactive

Labour have always been the same. As it is we already have a huge brain drain. People with good skill sets either leaving for better offers abroad or reducing hours.

For example, cyber security, pretty fucked without it but good pay. An essential worker but because they have a skill set which pays well then they are hated by the general population. My team have already been offered a relocation to New York offices if the tax burden gets too high. So we will be fucking off thank you and taking our millions in tax with us. Many I know have the same offers in their companies. Get in with a global company op.

The only people who will be left are the pensioners - who labour also don’t like. They will have to sell up and pay more tax to fund the unions and work shy instead.

The same percentage of tax doesn't mean the same amount of tax.

If you earn £50k you are still paying substantially less tax than someone on £125k, and you are only paying 40% on anything above £50k.

But you would only pay it on the the 2k over the threshold….so that’s fair yes?

This

They’re paying less tax because they earn less money.

Anyway, Labour pledged not to raise income tax. I think it’s unlikely they will break that pledge so early on when there are many other taxes they could raise.

Appreciate your POV but 2/3 of those impact me directly and I still support them - so it isn't universally true that everyone impacted will just try some fancy footwork to avoid them.

And they will undoubtedly mess around with some of these, although I think VAT was in their list of taxes they promised not to increase (VAT on private schools outside of this).

CGT is the one that annoys me - most employed people don't care and think of course it's fine to equalise with income tax. But that misses the point of why someone would take post-tax money and invest in something (not all investors are evil, by the way, some invest in start ups and small businesses which this country desperately needs). Why take the risk of investing if your gains are taxed in line with income (which for most people is not as risky)?

Exactly.

@susiedaisy1912

Someone earning £52k is paying the 40% rate on £2000.

Someone earning £125k is paying the 40% rate on £75,000.

There's a pretty big difference there.

Sometimes I think people just don't understand maths.

@SphinxOfBlackQuartz raising my employer pension contributions from 3 to 4 or 5 percent (which isn’t on the table anyway) will not make the massive public sector employer contributions fairer.

we might have to agree to disagree - it’ll be a massive FU to the private sector if they change pensions relief.

Labour have pledged not to increase income tax rates. I believe they are likely to raise CGT rates (or fiddle with reliefs) and potentially remove some IHT reliefs.

For your position, between £100k and £120k I believe the marginal tax rate is extremely high when you take into account loss of personal allowance and then the availability of tax free childcare/free 15/30 hours. (I want to say I've read somewhere it's over 100%, but I can't guarantee that)

Rubbish maths to follow:

Income tax at 40% - £8000
NI at 2% - £400
Loss of personal allowance - (£10k at 40%) - £4,000
Tax free childcare x2 - £4,000
Free childcare hours (45 hours x 38 weeks at £6?) - £10,260

So on the £20k above £100k, you are paying out £26,660. That's an effective tax rate of 133%. You are actually losing money by not salary sacrificing that 20k into your pension.

Obviously, the free childcare hours skews it a lot (I assumed one child qualified for 30 hours, one at 15 hours). If you ignored free childcare hours, that would still be an effective tax rate of 82%. So out of £20k, you are taking home £3,600.

Obviously if you have a partner which earns in excess of £100k then the tax free childcare and childcare hours bits are moot. But that income tax, NI and loss of personal allowance is still a 62% tax rate. So take home is £7,600 on £20k.

I don't know your specific circumstances to know what scenario applies, but something to think about. The cliff edge of £100k can be awful.

There are literally millions of people who COULD work but chose not to. The 'system' to encourage people into work is rubbish ; so the tax burden falls heavier and heavier on those who have educated and worked themselves into a place where they thought they could afford a good standard of living.

I'm one of those 6 figure middle earners who no personal allowance, no child support, huge taxes on any money I put into my pension ( and on the growth of the pot) and yes. I'm really struggling now as a single parent with an drug addict unemployed ex husband who pays nowt.

Its shit, and whilst i'm happy to pay my share for the NHS, education, roads, defence, social care etc etc. Im increasingly pissed off with the ' better off on benefits crew' who expect free handouts and contribute exactly nothing to society. FWIW I voted lib dem and hate the mess the tories left, but I'm increasingly fearful for my families future. I rent out a room, I dont have holidays, my kids are at Uni ( on minimum grant) so I have a lot to fund there ....