To think this epitomises the squeezed middle - HMRC shitiness

[lurchersforever]

So the weekend before Christmas I have received the joyous news that I have not paid enough tax this year so my personal allowance for the rest of the tax year will be adjusted so I can pay it. This will wipe out the pay rise I have just received (it was the teachers' 5.5% and the first 3 months were pretty much wiped out anyway as they were received in a lump sum in November so taxed more, so that what I received for 3 months was the same as I what I got for one month this month). Next month I'l get nothing as a result of the unpaid tax. I am due another pay rise next month as will start a promoted role so I'll see what that brings but it won't be much as not a huge step up this time.

Next month my mortgage will go up £100 as I've had to renew for the first time since the rates rose (it could be worse) and I also have to pay back pretty much all my child benefit from last year which, as a single parent with an ex who pays nothing (I am with CMS - he's low income but owns a house outright and has money for stuff he wants) stings a lot.

I did exam marking in November, which nearly killed me in terms of workload, and got £630, which is £100 less than the tax I owe so is essentially wiped out by that.

I'm so fed up. I earn a salary that I never thought I would and would have thought if I did it would be great, but disposable income isn't that different from what it was pre-Covid as a result of col etc, but, worse than that, every time I do get a bit extra it's taken away. Enormous increases in workload and stress for next to nothing in the end. What is actually the point in working yourself into the ground for it just to be taken?

Some respondents here should just think….new tax allowances, compensation for Waspi, compensation for blood scandals from 40 years ago…..how may people realise that this country is financially utterly BROKEN. The number of people that are net tax contributors is now a minority of the population so means the majority receive more benefits than anything paid in tax. What it says is our welfare model is a disgrace and allows far too many people to be reliant on benefits instead of working full time, as well as public spending far too high.

The evidence is also in the number of people routinely trying to do extreme tax planning with either pensions, salary sacrifice and working hours reduction to avoid the punitive deductions. A friend who is a bog standard Police officer is now in the higher rate tax band and has deductions of 60 % for tax, NI, student loan and pension. Outrageous. Guess what….he now refuses to work any additional hours as the deductions are so high

The number of people that are next contributors is now a minority of the population so means the majority receive more benefits than anything paid in tax.

It’s about half & it’s largely now due to an ageing population.

“Working-age people are typically net contributors to the state – meaning they pay more in direct and indirect taxes than they receive in benefits and public services.”
“However, even among this group, 45.3pc received more from the state than they paid in taxes, although this partially reflects benefits relating to education and childcare.”
“Meanwhile, pensioners are overwhelmingly classed as net recipients, with 85.3pc receiving more from the Government than they contribute.”
”These pressures are only set to intensify as the population ages and more people become so-called net recipients in retirement, with the number of over-85s set to double by 2045 to 3.1m.”

@Perfect28 I am kind of curious how you think you get the same wage as support staff. I seriously doubt it.

And a major issue is housing, think of how much tax is paid to landlords because people don’t earn enough to afford rents.

The threshold for the start of withdrawal of child benefit was increased to £60,000 this year (April 2024) so this should not affect you.
To the OP I would recommend getting a login to self assessment and having a look at what HMRC think your salary is. I took a new job this year and the tax they took was eye watering (PAYE). I logged on and saw that they had set my salary at £22k higher than it actually was and they were taxing me on this completely made up salary. I wonder if between your marking and payrise they've decided you're on a much higher salary. Definitely worth logging on to check.

A friend who is a bog standard Police officer is now in the higher rate tax band and has deductions of 60 % for tax, NI, student loan and pension. Outrageous

A bog standard police officer? Really? I'm in the wrong career if PC Bilbo Baggins is earning over £100k.

Police pay 11% pension contributions. Student loan is 9% I think?

We also tax lower & middle earners less compared to other Euro countries but that would likely only result in more top ups.

A bog standard police officer? Really? I'm in the wrong career if PC Bilbo Baggins is earning over £100k.

I don’t think the poster meant he was earning 6 figures, it’s the deductions of pension & student loan.

Employer NI is also higher I think for lower & middle earners.

And wage stagnation as I already said is also a big part of the issue.

Does the teachers' pension scheme allow you to pay AVCs? It won't help your income now but if the additional pay takes you into the higher rate tax bracket you would at least get full tax relief on the additional contributions

I get it
Support staff are even worse off - 2.5% increase, due 1 April, paid Nov & wiped out by tax & NIC

I sometimes wonder if they drag out all the pay negotiations on purpose to get a chunk of the money back via deductions & benefits adjustments

It's early - misread as 45% bracket, not 40%

I think there's a general misunderstanding by the public about moving between tax bands. Higher rates, SLDs etc only apply to the excess earned over each band. They still have more cash in hand than they did before, moving from the basic rate to 40% tax.

This. You were bloody stupid not to think about the tax implications before you signed up for the second job, and your question / title of your thread is tone deaf.

This was my whole thought process when all the public services were asking for payrises (I'm nhs), that whatever we get has to be paid for by the taxpayer (which includes us) so that, combined with the raised bill contributing to keeping inflation and therefore living costs higher, actually we were never going to see much of it.

At 72, I get a (slightly) enhanced state pension and some income from savings. Until the end of the last financial year, I wasn't liable to pay any tax but the increase in my pension pushed me over the limit. In August, I had a letter from HMRC demanding over £6k in tax and when I logged into my account, lo and behold, they still had me working at my old job (which I retired from 8 years ago) with earnings of over £30k! Not sure why they weren't chasing me for back payments for the previous 8 yrs tbh! Anyway, after many frustrating phone calls (with babies crying in the background and sounds of TV), they reduced it to £250. No apology and no explanation as to how they reached that exact figure but I've just paid it as I'm not up to fighting any more 😒. Good luck to any of you with an HMRC issue x

On that point it does make sense to raise the retirement age, though there will be a limit after which people can't usefully continue to work.

Have we thought about 16-22 year olds as well. Rather than continuing at school or at university maybe more would benefit both themselves and society by getting into the work place with on the job training.

One problem with disability benefits especially those relating to mental healthi or conditions such as ADHD is how easy it is to commit fraud by exaggerating symptoms. Its a lot harder to say you have got cancer or other conditions that can be objectively verified by means of scans or blood tests. I don't think that there is an easy solution to this but something needs to be done.

You don’t get disability benefits for cancer. Anyone who thinks it’s “easy” to fraudulently claim disability benefits has never met a successful claimant.

On that point it does make sense to raise the retirement age, though there will be a limit after which people can't usefully continue to work.

Except healthy life expectancy hasn’t changed & it would need to be well in the 70s to mitigate the impact of an ageing population.

One problem with disability benefits especially those relating to mental healthi or conditions such as ADHD is how easy it is to commit fraud by exaggerating symptoms

I don’t think there can be so many fraudulent claims that it actually impacts the bottom line? 50% of people receiving more in benefits than paying in taxes is not that unexpected when you think about it. It’s more the demographic switch that is making it a problem.

If you take 15 yrs of state pension that’s approx 172k. If you earn 50k a year that’s 10.5k a year in tax & NI so that’s 16 yrs before you break even pension wise. Add the costs of your schooling, education, healthcare, etc than you can see how most people are only going to be net contributors for a small portion of their lives.

And obviously it’s in a countries interest to have a healthy & educated population so it’s not just about the individual.

https://ifs.org.uk/news/42-million-working-age-people-now-claiming-health-related-benefits-could-rise-30-end-decade

Sounds like 1 in 10 working age people are on disability benefits and that among young people a lot of this is for behavioral or mental health issues.

I think fraud is the wrong word as I people may genuinely have these conditions but might be led to exaggerate the impact to get benefits. Honestly I think the country can't avoid it and we ought to limit to conditions where there is a severe cognitive disability or has had to have in patient treatment for a major mental illness. We could usefully spend some of the money saved on improving mental health care.

I also think that it is simultaneously possible that as well as widespread misuse, honest applicants in need are being turned down for these benefits.

Another way to reduce the benefits bill would be to make absent fathers pay for their children and then include this in the mother's income when calculating benefits eligibility. The state could pay if needed and recover the debt later to make sure children didn't suffer.

Well I don't think it's bloody stupid to think a second job will make you better off. The tax system is surely flawed if promotions/ additional work make them unprofitable for people as those roles need to be filled. I've been exam marking for years and am a team leader and very accurate, which is not the case across the board for my subject. They struggle to fill the roles and to get the papers marked in time. They have to offer incentives for people to keep marking once quotas are done so I don't think it's a good thing if more experienced markers think it's not worth doing anymore.

I also don't think my thread is tone deaf. I didn't say I was the worst off person ever and I think it's understandable to be disappointed that what should be an excellent salary doesn't feel that way in reality.