AIBU to feel disheartened by earning into the higher tax band?

[Chocolateapot]

I have finally after many many years of studying progressed in my career to just slightly above the 40% tax threshold. Unfortunately I’ve realised this now means any additional income I earn is now taxed at 40%, student loan 9% and 2% national insurance, essentially giving a marginal tax rate of 51%.

Not sure why I bothered tbh

What a stupid thing to say

So what's the picture here then, so we know how concerned or annoyed we should be by it...?
What are the numbers of people who are claiming benefits as a lifestyle choice, as oppose to those genuinely in need? And what criteria has been used by those who have gathered the data to differentiate between the two groups. And how much do this group actually cost?
When we have the answers to those questions we can decide whether we actually have a problem that needs a solution, rather than vice versa.

Sorry forgot to tag you in my previous response

And don't forget that as soon as you hit the £100K salary ceiling, work-related stress tends to double...

One of my DC is a band 8 in the NHS. When he went onto the higher tax band he put some into a SIPP and did a salary sacrifice for an extra week annual leave.

Quit and go on the dole then 🤷 if life as a high earner is so hard.

Sorry but I think this is a bit dramatic - you are being seen as a cash cow with the biggest shoulders.

What do you actually earn? You say you have just hit the 40% tax rate and only marginally? So actually very little of your salary is taxed at 40% yet you are a cash cow, ok!

Don’t you think it’s an issue, that the benefits bill is massively rising? The whole premise here is that OP is paying a shit tonne of tax for minimal public services while looking at benefits rising ever higher. Surely you can see that taxes rising, public services falling but benefits rising might be linked?

Surely these are all things you knew? Did you not realise a student loan needed paid? Are you unaware how interest works? Tax brackets aren’t exactly a new and confusing phenomenon.

if you don’t like it then you could always change job and early below the 40% if it makes you better off financially.

I was a bit disheartened by a recent salary increase where my salary increased by 40% but my take home only increased by 25%. But then had to give myself a wobble - I now focus just on the fact that I have a good wage, prospects to earn even more in the future and it's in exchange for a more interesting job and the satisfaction of climbing the career ladder. Plus I do want to live in a society where the most vulnerable are looked after.

I know the UK is facing problems at the moment, I'm deeply saddened by the state of the NHS, the police force, lack of investment, poor job market etc. I like to think at least my tax contributions help make it slightly less shit, I just wish more millionaires and billionaires (and their corporations) thought similarly and would pay their tax dues too

When I reached that point, I paid 40% tax, 12% NI, and, as a single mum, they removed £1 of my child benefit (for my one child) for every £10 I earned. So I was paying 62% incremental tax.

And then if I spent the remainder on anything other than food, I paid 20% VAT plus fuel tax, insurance tax, alcohol tax......

It got so silly, I chose to take a lower paid job. Now I have a 5 minute commute and have regained an hour a day and £250 a month train ticket. I have time to make my own lunch so I'm not giving custom to coffee shops or sandwich bars or the station car park, and I buy less petrol. I buy everything else second hand if I can.

I am better off to the tune of about £350 a month. I think the tax man is £100 a month worse off and other businesses by £250.

Thry pay their taxes too. Theres no one to blame but the government that the tax take in the UK is so poor. Getting rid of the marginal tax bands and increasing the tax rates to compensate would boost the tax take immeasurably but Keir is too chicken to do this. This is the issue. Try giving £100k + earners their tax allowance back and the little socialists in his party throw their toys out of the pram and whine about tax breaks for the rich even though having such big marginal tax rates is deeply damaging to the Uk economy and addressing it would boost the tax we take.

I actually agree with you - many ways to drive up revenue and productivity. I'm also on 6 figures and went down to part time as financially and work/life balance wise it just made more sense - I have the same household income working 4 days a week as I do working 5. Which is silly really

Why do you pay your tax as one lump sum? DH is self employed and makes two payments per year, but we put money by every month to pay for it. At least then we get savings interest on that amount.

Right, but at the top of that page it states that 50% of people claiming UC are in the 'no work requirements' category, so people who are severely disabled, or a full time carer of a family member. So that actually only leaves 18% who are considered able to work but are not.

Also those that work hard and are good at what they do maybe they don’t want to “live a frugal lifestyle” and not go on holiday 🙄. Whats the bloody point otherwise!

Definitely put the additional income into a SIPP. You’ll get that tax back and if you are young it will have the benefit of compounding over time, you’ll thank yourself massively in retirement. And you can access your SIPP 10 years before state pension age so you might even use it to retire early or reduce your hours well before you reach 67.

I’m 45 and really wish I had educated myself better about finances much earlier in life. But I have now started a SIPP and am working on a plan to help me retire before state pension age.

And we’re supposed to believe that they’re incapable of work? I watched this panorama program that showed articulate, talented people on disability benefits for life, people with skills that could easily get work. Mindblowing that they’re given money not to work in the UK. Mindblowing.

www.bbc.co.uk/iplayer/episode/m002rwzx

But you said that most people on UC were working.
And they're not

This is my experience too when I got a pay rise in the corporate sector as a single parent that was nowhere near the pay rise I thought it was going to be.

‘They’ do not get more of your earnings than you do. It is only 51% of anything over £50271. So if you earn £50272, you get 51p deducted from the extra £ rather than 31p. And extra 20p per £. You would need to be earning considerably over to see a large change in the amount of tax you pay. And if you earn over £50k you can afford it.

You also get a lot of services for that money.

Umm, student loans are on very different terms to standard loans and the interest rate increases when you hit a good salary. They are punitive and disgraceful.

Well done for the most condescending post though!

I work with people with learning disabilities...what should happen to those people in your world? They haven't paid in...how should they live??

Your understanding is incorrect too...most people have paid in. Virtually epvery time they buy something they pay taxes.

If you have assets then you benefit from not paying rent and your assets rising in value.

This is a divide and rule distraction...the entities not paying their way are the huge corporations...but yeah attack societies most vulnerable

Is it hard to understand that people who would participate in a documentary would be the best or better communicators? 🤦‍♀️

Just imagine the tax rate if Scotland went independent. You can add more tax due to lack of UK gvernment subsidies, funding the massive immigration the SNP say they want, etc. Any actual net tax payers there would soon be deserting the place.