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.

Why do you think it doesn’t lead people to limit their earnings? There are many people on this thread saying they limit their own earnings for that reason. Are they mistaken about their own reasons?

If you were asked to pick up another shift at work, but in return you lose your entire childcare hours, would you accept?

You don’t actually get the 100,000 you realise? More than half of it is taken off with tax, national insurance etc

The whole tax code needs rewriting and massive simplification IMO. The distortions around the cliff edges in both income taxes and universal credit hours worked are exaggerating the worst effects of both tax and benefit issues.

But it means people (and especially lower income) have less money to spend.

Money being spent is what drives the UK economy. God knows we barely make anything and our energy prices are not constructive to industry moving here.

I agree with you

I’m not saying I agree with the policy, I was explaining why it’s like that. Unfortunately despite her statements about supporting growth, Rachel Reeves’ decisions so far have achieved exactly the opposite effect on the economy.

Oh they are killing the economy, killing people's ability to have spare money to spend and doing nothing to grow the economy.

The post you initially replied to mentioned people in their late 40s. This is not a retirement issue. We do not, in fact, need a system to persuade highly skilled 40 something consultant doctors to work less, even though they don't actually want to.

The NHS most certainly does need better succession planning, training and progression, but part of that actually requires consultant roles to be filled. Having senior and highly skilled doctors around them is part of how the junior ones turn into consultants!

I don't think the system works great at any stage for anyone. I wish they'd take single income families into consideration more.

My dh has turned down pay rises as we would be worse off and we are on 60k before tax (so around 45k after) we are basically a one income family as I can only work minimal hours (child with additional needs childcare doesnt exist/too expensive) We don't get any other benefits/help.

We get some child benefit but have to pay some back via self assessment which is a pain (his company are yet to get his tax right to take it straight from wages)

If he took the pay increase we'd be worse off even if he put it in pension which his company has a rubbish one. In real terms we'd be down £330 a month which we need to live. If we had to pay more tax but wages didn't increase in line with this I'm not sure how we'd survive. We are already pretty basic cheap no thrills lifestyle.

We'd be at least £500 better off a month with full CB if we both earnt 30k each but this isn't a option. There is no incentive for my dh to progress his career but seems ridiculous to turn down promotions or bonuses. There is also limited mobility for us to change and move out of the situation. Our childcare needs will be high for a lot longer than most all the while my earning potential goes down and the COL goes up.

the transferring of more than 10% of PA would be helpful, 100% transfer would be good and an alternative to nursery in some cases where its not an option due to additional needs

This is a good point.

If you go from 25K to 100k you are earning 4 times the salary but paying 9 times more in tax.

If you from from 125 to 200K you are earning 1.6 times the salary and paying 1.8 times more in tax.

The thing is however - that once you go over certain income thresholds (like 100k) you also lose all benefits (child benefits being the biggest) and over 200k you also start losing your pension allowance.

On top of this, the top 10% of earners already contribute 60% of the income tax. We lost loads of high earners post Brexit and the loss of them is definitely why we now have a country where more of the population are claiming benefits than putting in. People warned against taxing the high earners too much and they were right. No one is going to actively work against their own best interests and it's foolish to demonise the segment of the population propping it up.

It's all maddening!!

It sounds like you have all the easy answers do you run a large company and if not, why not?

I think we have just decided today that our best option is to move abroad. @Recoverypro , no, we don't run a large company but we started a manufacturing company 30 years ago, and it is still trading quite successfully. However, we're almost 70 and would like to retire.

5128gap is always a bit free with judgement and opinions, and short of sensible suggestions.

YANBU. Income tax should be progressive. The £100k cliff edge for childcare and the tapering of personal allowance is nonsensical and encourages workers to put the brakes on or reduce the effect of the cliff edge tax (legitimately) through higher pension payments. These cliff edges need to be scrapped. Reduce the 45% threshold from £125k to £100k. Someone earlier mentioned the Laffer curve. This is what it’s about…. people would be happy to work harder and pay 45%. I bet the overall tax take would be higher - and the productivity of the country would increase - than the current system which encourages talent to fall short of its potential, early retirement and reduced hours.

It’s just so obviously stupid and de motivating. We need to get the economy moving again not penalising the talented and hardworking. The benefit claimants laughing at “the rich” being taxed will have to face the reality that those paying for everything will stop bothering / will leave.