To think that frozen tax brackets are counterproductive in growing the economy?

[Somedreamer]

I earn just enough to fall within 40% tax bracket. I have enough to live on and I know I am lucky. I wouldn’t however say that I am by any means ‘wealthy’.

I live alone, and maintaining the house has been very expensive this year. I really want to go on a long haul holiday and have been saving up for this, but needed to spend this money on house repairs.

I looked into getting a second job (minimum wage, just a few hours at weekends) to earn a bit extra that I can put this aside to keep my holiday plans on track. After higher rate tax, and after travel costs, I would only be taking home about £5 an hour, and I realised I can actually save up for my holiday quicker and easier by cutting my outgoings.

Obviously that’s all fine and I’m fortunate to be able to do that, but thinking about the economy, isn’t it better to have people working more and spending more so that they can have the things that they want? Whereas I have just decided to work less and spend less.

I agree that tax brackets are too high, but I don’t think that you taking a second job would be necessarily be productive for the economy. At the moment, there is a job shortage, so you would potentially be taking a job from someone who doesn’t already have one.

Depends what they are spending on. Someone going abroad and spending their money in another country doesn’t necessarily benefit the UK.

My mind is almost blown when I hear labour ministers incl rachel reeves talking about "getting money into people's pockets so they can spend " whilst simultaneously thrashing the business that needs that spending in many ways...forced min wage increase / ni increases / duty on x y z and freezing thresholds and pushing the others like you op into the upper bracket. And stopping youngsters from getting the jobs.
It doesn't make any sense whatsoever.
Now they have the gall to waste 3 grand for business who recruits youngsters ??

Utter madness.

Don't hold you breath with this Government - all they have done is increase benefits

Literally everything Rachel has done has been counterproductive to growing the economy.

The tories introduced this but no one seemed to notice it years ago.

It’s also wage stagnation in general & housing costs which take up so much of the income after tax.

We need fewer people taking out more than they're putting in. We need fewer people living of benefits. We need more people working

Except we have an ageing population so taxes can only increase.

@Caterina99 Agree. I’m probably one of those, or was. Recently shifted gears to non-profit work and occasional consultancy because the numbers don’t make sense to do otherwise. I’m enjoying my new life and love having time with the children, but the treasury is down a few £100k/yr.

I’m also sad how many non-British friends have moved or made plans to, becuase of the non-dom changes.

These people happily pay/paid serious PAYE, and cost very little in services, but (unlike me) have no ‘patriotic’ reason to stay to have their non-UK businesses and investments taxed as if they were UK ones. They were geese that laid golden eggs. We should be trying to attract as many as we can, for our own self-interest, not chasing them away.

Let's get people working. Let's get the economy growing. I'm still waiting to see what Labour are doing to help this

We haven’t had growth since the crash, not sure anyone can achieve it now.

Fake self employment, i.e. an employee in reality but pretending to be self employed! It's been a problem for 30 years but HMRC/Treasury can't get to grips with it.

Same with people spending their money on imported goods where the money ends up leaving the UK, thus worsening the awful balance of trade deficit.

I do get it, I actually vote Labour and work for the NHS. I also know that full time workers on minimum wage will pay less tax.

I’m just talking about me, a just-above-average Joe, and the financial decisions I’m making.

I’m not complaining, I will still get my holiday and will just do without a few other things to make it happen. Fine. I’m just thinking that there will be tens of thousands making the same choices as me and wondering what that does to the economy.

Fair point, maybe I should look at a side hustle as another PP suggested.

Inevitably any thread about tax and economy is deeply political, but I cannot forgive the lack of thought that this Government brought into their landslide victory. It was always going to happen after the shambles, even though Rishi Sunak did a valiant stint. Where was the plan?

Rachel Reeves has crucified the risk-taking parts of the economy. The clever mechanic who might have set up on his own? The just qualified plumber who likes posh bathrooms and has saved just about enough for three months of cash flow. The chap who has put his savings on the line and taken a loan to buy a garden centre nursery from his employer who wanted to retire, who has seen his March sales drop 50% from 2025. I know all three of these examples personally, and right now, they are all facing being wiped out.

And all the jobs and experience that go with them.

It may be a lovely warm feeling to think you work in the public sector doing worthwhile work saving beetle populations, but someone has to earn money to fund it.

a huge issue is people want excellent public services but not the taxes that come with it. Compared to many other countries lower & middle earners here pay less tax. The higher earners are in line.

This is because there is much larger wage disparity in the UK between higher and lower earners. In Nordic countries, there is less inequality because the pay scale is compressed and the difference between higher and lower earners is much smaller. In the UK, we can’t charge lower earners more tax because they already can’t afford to live.

We either need to significantly increase the wages of lower earners, or, significantly reduce welfare benefits. The way things are at the moment, we have disincentivised people to work.

Isnt that the companies doing though? Many companies " employ" people but make them actually work as self employed. It's to take away their employment rights etc

housing costs have a big impact too

It's a two way street. Lots of people "want" to be self employed due to perceived tax benefits, potential benefit fraud due to unreported earnings, and of course, those who aren't actually legally eligible to work.