Where is the incentive.....

[LookingforMaryPoppins]

Fairly certain I am going to be shot down and 100% appreciate I am in an incredibly fortunate position however.......

My parents are working class, money was short but I never went hungry. I was taught that education was everything and the value of the opportunities it offered. I passed the 11 plus, went to grammar and was the first in my family to go to university.

Fast forward to now and I have a well paid professional job which I (mostly) enjoy. I am now self employed (to give me the flexibility to be there for my youngish children) and have ended up in a situation where I worked far more hours than I would choose due to not wanting to let clients down. This has resulted in a huge tax bill - despite putting a good amount aside, when you hit 100k you start losing your tax free allowance which effectively puts you on the equivalent to higher than the highest bracket. I think it equates to over 60%.
Ive also had the increase in school fees this month - having started off in state school it was very clear there was a total failure to meet needs (youngest daughter is academically bright but dyslexic - this means she "meets expectation" in state provision so gets no help albeit fails to acheive her potential which apparantly is acceptable to the state education system).

Despite the increase in fees, which we will cover by not taking a family holiday, I have now chosen to reduce my hours to keep my income below £100k. This is at least a £20k loss in income tax to the country (less than 12k take home reduction to me), another £6k loss to the country in VAT plus the loss to the economy of the money I have forgone so am not spending.....

I know this country has the mentality of despising anyone doing better than average but surely anyone with any economic sense can see this is a lose lose scenario......

If I didn't have school age children whose education would be detrimentally disrupted I would move to different country!

I have done well. There are lots of ways to do well.

By quoting completely different circumstances. The question is why should the tax system create a situation where earning more money actually leaves you worse off. Your DH is not in that position so irrelevant to the debate.

I already work part time... I have reduced this further in the short term although suspect longer term I will max out in pension contributions. The " halo" has slipped, for me there is simply no incentive to work more until I work out the exact figures and pay anything over £100k into my pension.

Get an accountant.

So he doesn't take home less than someone on a significantly lower salary, he just doesn't object to the 62% tax hit.

An "appropriate amount of tax" is the issue. It's insane that people (parents, who almost certainly have high expenses) have a lower take-home pay if they earn £125k than if they earn £99k. That's not in any way related to roads, dentists or state schools. It's a very poorly-designed system.

It’s probably poorly designed as intended, to arrest growth and productivity, I.e. communism.

Yes - the thing that is "seriously wrong" is the tax / benefit system combination. A single mother earning £125k a year with two under 5s children in full-time childcare would literally be better off if she halved her income.

Totally sympathise

There are a number of cliff edge / high marginal rate moments across both taxation and benefits, the over £100k, the loss of child benefit advantages, the limit on working hours or earnings for benefits, even the winter fuels allowance

Much more gradual tapering and not grouping these issues ( in you case the loss of allowance and childcare) is just simply the right thing to do but govts repeatedly fail!

Really annoys me when people criticise high earners for being frustrated about it, or act as though they are immoral for taking action to mitigate like going part time, I I have the same sympathy for those with benefits

Max out your pension though!

7 pages of comments, a 50/50 split as to whether IABU yet nobody has been able to offer any economic justification for this situation / reason for it being created which demonstrates why IABU.

Assuming its intentional, why?

I can only assume to encourage (force) individuals to pay a significant sum into a pension but if that's the case, why just this niche bracket and why the total disregard of other methods to save for retirement.

If it's unintentional, surely it should be changed (methods discussed earlier) to get rid of the cliff edge and give incentive to people to work more and pay more tax into the system.

OP The justification is to make people poorer, and own nothing eventually. They also know human nature and brainwash people and manipulate envy to attack anything or anyone labelled as being ‘privileged’.

This. Probably same people who mocked the lady who asked about the expensive holiday. The because I have not much, you should not have much either brigade.

Once you're earning more than enough money for yourself, an unfair amount (as you're likely not working legitimately 4 times harder than a health worker or carer only earning 25k, it's just capitalism is bonkers) they give you incentive to drop your hours down to make room for others. So other people have that oppurtunity. If you're hogging all the hours of the stupidly paid job, no one else gets the chance to climb and earn even a portion of the stupid money.

There are more than enough people who will work the hours you don't need to work, so this gives you incentive to step aside and let them - whilst still allowing you to afford housing and food.

You can keep hogging all the high paid work and plonk it into your pension if you like, which will just contribute to the tax bill when you're older, which also benefits society.

Youre just getting incentive to not be so greedy and let someone else get a look in.

Nice idea in ideal world.

The money simply doesn't get earnt - nobody else does the hours I don't do as tends to be the case.

I would also add that 100K doesn't go far in parts of the country.

Stupidly paid job? Greedy? Are you for real? If you're given the same opportunity or if you have OP's skills you wouldn't turn down the money. Hypocrite.

If this taxation goes much further we are veering into communism- a group of us work hard to fund those that can’t / won’t but we all end up with about the same.

Maybe am old fashioned but I take pride in the fact I am self supporting unless I really needed benefits due to disability I would hate to think others were paying my way. Amazed how this doesn’t bother people.

😂 at hogging all the high paid work. Er I’ve just gone on mat leave and they couldn’t find anyone after 6 months of trying to cover my role…..

Communism relies on closing borders and restricting people and capital leaving so that won’t happen. More likely gradual loss of talent and further decline as we are already witnessing anyway. What we need is investment in talented people and jobs and growth industries like tech and AI, but with a proper collaborative plan across universities, industry, private and public sector. The problem here is the lack of faith in Government - you cannot plan long term as they give in to dog whistle politics and things can quickly go against you as a business leader. The most successful countries now have the long term backing of their Governments.

True people will just go. Cue the typical mn response from some good but that’s madness which will impact them more than others.

We’re seeing policy impact already. It might all fall down soon anyway if the markets keep reacting.

I have never read so much rubbish is all my life. Greedy for earning over 100k? I do not agree. At all!

This country does not have "a mentality".
There is no hive mind, it's a diverse nation.
Many people achieve, and many people make a lot more than you, and manage to continue successfully.

I earn way less than you, OP, but I completely agree with you.

Paying an appropriate amount of tax is a privilege. It's the cost of living in a caring society.

I don't think anyone disagrees with paying taxes but the appropriate amount is definitely up for debate!

Yanbu - as has been mentioned, get a better accountant.

The “it’s a privilege to pay tax” posters have obviously never been self employed! And I suspect are benefit recipients…

And if they win the lottery say £10 million, they'd voluntarily hand over £9.999 million to HMRC to help others 😂