The loss of an individuals personal allowance (for earners over £100,000) should increase each year with inflation.

[Itsthedifference]

If the personal allowance is raised from £12,570 to £20,000 (Great):

Then, by the same justification, shouldn’t the £100,000 “cap” be raised?
(Where an individuals personal allowance is reduced by £1 for every £2 of income earned over £100,000)

Surely the loss of your personal allowance should be increasing each year with inflation. Yet it’s been the same since 2010.

Yeah its very annoying. Because when you start earning over 125k, for every 10 grand you earn you take home about 4.
Therefore, to get significant payrises in your pocket, you have to jump up huge amounts.
This means people arent pushing for payrises. Lots of people happy to stick to under 100k. Wages for everyone stagnate. And this is why people are still accepting entry level roles at 20 to 30k and it seems normal to pay someome 30k for a junior position.
Its like house prices, if the people at the top of the ladder have nowhere to move to then the people at the bottom can't move up either.
The difference in take home income between 100k and 150k is not that much. It also stops women from being ambitious and climbing the career ladder, as 150k jobs are usually a lot of work and commitment and many women consider if its worth it to not be present for their kids and decide it is not. Which is why there is a wave of women leaving senior positions.
It stiffles ambition for everyone, holds women back and earning 150k as opposed to 100k doesn't change your lifestyle really at all. Maybe you can go on one extra holiday a year.

They are net contributors so they need to be a priority!

But how we gather tax revenue should be a high priority, if we want decent public services.

A person earning £150k pays about ten times more tax than a median earner. In other words, for every £150k earner we lose from the tax base we must double the tax rates on ten median people.

So an effective tax band of 100%+ that actively discourages people from moving into those top levels is crazy, especially when it’s specifically harmful to women, who tend to benefit more from the childcare allowance.

@hungryKat and @MidnightPatrol I misunderstood the NI tax table and read the 'higher' category as a flat rate 2%.

Given that it would at least make admin sense to universally apply the personal allowance and the 8% NI rate and keep the Income Tax thresholds the same.

That seems equitable and fair to me. It might cause some overall increases for some earners but that is always the way. One reason for applying universal rates of NI is that it is more difficult to offset payments to pensions in order to reduce income tax.

https://www.gov.uk/national-insurance-rates-letters
The NI table I used

Admittedly if you have a low earning spouse or children you are able to pay them dividends. But you will not make any savings paying yourself any more money be it dividends or salary, indeed if you pay salary you will also pay employers NI of 14%.
So yes you are right if you can give away/spread your money over family members setting up a Ltd company is beneficial, I see why doctors (or any profession who can do similar) would do that

The post you were replying to was talking about marginal rates. Not the overall rate.

I don’t have any personal allowance but there is a lot you can do to reduce the overall rate, specifically maximising pension contributions.

Read the papers later in the day?

There shouldn't be any loss of the personal allowance. There should never be the situation that marginal rates are lower at higher incomes (which we have now - as it goes from 40% to 60% and back down to 45%). They could have the 45% band start at £100k or something.

It doesn't work for doctors... our pension scheme calculations are uninterpretable as you cant predict how much is "going in" and if you have too big a jump within the year you get horrific tax bills (many many bosses are being asked to pay 40-60k tax bills due to theoretical jumps in pension pots and are having to remortgage their houses to pay the bills, the worst I've heard is a 100k bill

This is the biggest issue for not wanting to work overtime and hence the waiting lists not really coming down as everyone is scared to work more. One of the medical directors was telling us at a careers day the other week that she got I think it was an additional 20k over 3yrs for being medical lead for the hosp... but because the pay rise has incalculable impacts on her theroetical pension she got a tax bill for 40k... (and shed loads of stress/hours and hours of work beyond what she was being paid for). She was like yeah it was great for the impact I had, but if I'd known I'd have paid 20k for the privilege of the stress and work I'd not have done it

Once the economy is stable and we can afford to pay for education and health properly then yes / until then sorry the most well off need to take the hits

Same here. Husband on £125k and Im on £70k. Happy to pay high tax as the country really needs it. But we don’t see any quality services in return. We pay £300/ month into private healthcare as NHS is a joke, the roads in our village are full of potholes, streets are dirty, public transport is a joke, kids schools are a disgrace compared to the quality of education I received abroad.

You are totally missing the point. You can’t force anyone to pay 100% tax, they’ll just work less to avoid it.

The current system does not maximise overall tax receipts so tough to understand why you appear to support it.

You’ve managed to miss the entire debate with this.

Is this policy actually raising much (if any) in additional tax revenue?

Because between the 60% rate and removal of childcare subsidies, the group of people paying ~50% of tax receipts are being very heavily incentivised to pay less tax (via pensions or working less hours) - which is a huge drain on productivity.

Reversing these policies may well see an increase in tax paid. And - is probably a significant factor in our productivity challenge.

@childofthe607080sthe well off won’t take the hit, as outlined in this thread they will simply adjust their behaviour. When people have studied hard, worked hard, work long hours, sacrifice things for their family they expect to be rewarded. This constant seeing these people as cash cows is ridiculous. Personal allowances haven’t moved since 2010, more and more dragged into the higher tax bracket, soon those on the basic state pension will be dragged into tax.

Meanwhile those on benefits don’t pay tax on their benefits and many chose not to work. Working people only have so much to give.

I’m sure what I have to say is unpopular but here goes.

I am sick of the highest earners in society carrying on like they’re seriously disadvantaged and struggling. £100k is a lot of money. Pay your taxes.

The whole point is that they don't take the hit. They reduce their income.

We do. It’s what carries everyone else.

It's so refreshing to see someone willing to change how they think slightly on here! I don't think I've ever seen it before 😍

Have you considered trying to actually engage in understanding the ideas, and why this is being discussed?

They do pay their taxes! A hell of lot more taxes than lower earners.

The doctor pension stuff sounds appalling. If you’re clever and hardworking enough to be a doctor you have so many other options in your life you could do and not have any of these problems. But the rest of us lose out because we need doctors. So shortsighted and typical of modern Britain.

If £99,999 basically becomes the max wage for people of childbearing age in the uk, then no one’s wages will go up other than when the government forces minimum wage rises (then we lose jobs as there’s no extra money swilling round above that people are spending to absorb the costs).

Honestly all the cliff edges are poor policy (UC credit, child benefit at £60k, tapering from 100k). The loss of tax free childcare/free hours at £100k is the worst of the lot.

It makes more sense to me to make some things like the personal allowance, child benefit & free nursery hours universal. Relatively few people are not entitled to them anyway so the additional cost of making them universal isn’t a lot and it means everyone feels like they get something for their contribution.

We have been around the border for losing child benefit the past few years and we just take unpaid leave in the holidays for childcare because overall it loses us so little it feels worth it to have time with the kids. So if I go from £60-65k I can

Take majority of the month of August as extra holiday and not get any of the £5k but save ~£1.5k in holiday club fees (net of what I’d spend to entertain the kids at home)

Pay 40% tax, 2% NI and payback about £600 of child benefit when I do my tax return and earn an extra £2,300 net a year then pay £1.5k extra in holiday clubs so overall end up with £800 more than taking the leave.

Longer term I might earn a lot more and lose the childcare fees in the holidays (& eventually not have child benefit as a consideration) so I’ll do something different but right now I’d rather buy the extra holidays.

At the 100k threshold it actually costs parents more to work and it’s very unrewarding getting that extra even for those without kids.

What any one individual does isn’t necessarily important but having a structure that basically encourages lower productivity in higher earners doesn’t make sense if you want to maximise revenue.

They do! That’s the point

At least try and understand the problem.

Not an ounce of sympathy from me OP. Boo bloody hoo, 100k is a massive salary.