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

By the way, tax on earnings hasn't increased under Labour, it is what the Tories put in place.

Well for every extra pound you earn, you're still getting 49p more to spend than you had before. Have you never considered looking on the bright side of life?

Ha I’m sorry but who would ever say thanks for my £1 pay rise but I’d be more than happy if you just gave me 49p

This is simplistic thinking and does not take into account the cost to the OP's personal life in continuous studying and striving for promotions and pay rises only to give more than 50% to the government for piss poor public services.

The system rewards shirkers, not strivers like the OP. No wonder this country has lost steam and is bleeding out wealth creators in droves.

People who prefer to look on the bright side and choose not to feel hard done by? 😂
Of course, if a lifetime of feeling disheartened is your preferred outlook, then crack on.

I never minded it until I had sight of a bunch of financial statements from people working very part time jobs and claiming UC and realised they had a higher net income than me (and cheap social housing rent)

It was a revelation. It explained why so many people in low paid jobs round here can still afford big days out and holidays etc

No, I don’t feel like this. Yes, I earn in the 40% tax band. Tax is what we have in a civilised society and it’s only right that those who can, pay more to ensure those who can’t can be housed, fed and access services. And I say this as a self employed person whose tax is paid in one colossal lump sum every year. Trust me, that’s a lot worse than having it deducted by PAYE. Billionaires also need to be taxed and yes, I do vote in accordance with my beliefs. Edited to say I also make frugal choices like staying in a much smaller property than I can afford so I’ve got more disposable income to do things I enjoy. The problem is a lot of high earners max out their lifestyles then complain that expensive choices means they can’t afford a holiday or a new car.

Not until 60-80k

Yeah this is the kicker, with the cost of living and fiscal drag, this concept of those with the broadest shoulders needing to pay more tax is starting to bite. Unless you are mega rich then your shoulders are already weighed down by the massive rises in food, energy, water and car bills. Two kids in nursery on full rates is £54k per year. No joke it’s £2k per month per child. They all get fifteen free hours once they turn three so it would be unusual to have two on full rates, but even so when both of mine were in nursery it was £2k for the little one and £1.5 for the big one PER MONTH. Clearly as someone earning over 100k I am a higher earner and therefore considered to have these broad shoulders, but that income these days is not megabucks, it doesn’t go as far as it used to, and certainly can’t absorb £3.5k a month in childcare. So we don’t go on holiday at all, because of the COL and the massive childcare bill, and yes it’s frustrating to see so many people getting support with various things and affording holidays. Just doesn’t feel like hard work pays.

I'm disabled and work full time (in v stressful job) plus an additional job.
I agree that if we were just supporting those who genuinely couldn't work then I wouldn't begrudge it. But it's abundantly clear that for some it's an absolute lifestyle choice to live off benefits. And when they have the same net income as me and I am a higher rate tax payer (with the stress and long hours that go with it) then I am afraid something is badly wrong with the system

Uc days out tickets are often £1 entry

Quite. They get heavily discounted entry despite having the same net income as me. Work substantially less yet have a better lifestyle...

I understand your perspective when I see that people who never saved and pissed their money up the wall get rewarded with pension credit. (which is a nice little passport to other freebies), I have a modest occupational pension and am worse of financially.

As a child free pensioner I directly subsidise families who use much more of the local authority services than I do. My council tax is 75% of theirs.

The entire tax system is completely rotten and corrupt. People wonder why there is a black economy where people have a cash in hand side hustle to keep a few hundred a month out of the grubby hands of the tax man.

Finally, people are starting to realize how messed up the system is. Rewarding the wrong people and taking from those who do the right thing.

I feel guilty whining about it, but...I'm going to whine anyway. I finally get my state pension next month. I currently have my teaching pension and I'm partly on the Intermediate rate here. Next month, I move up to the Scottish higher rate for part of my pension.

I do recall voting to pay an extra penny per pound in tax. I don't recall being warned that our higher rate tax band would add an extra per cent of tax and kick in sooner.

Yes, I know...I've got my bus pass, free eye tests and free prescriptions. (I'm not currently in need of personal care, but that's not quite what people imagine it is. The private care homes here appear to have put up their prices to account for the personal care element and - of course - the residents still pay what the social work dept laughingly refers to as 'hotel costs'.

Yes, I acknowledge that I'm better off than many. Just having a moan.

ETA Yes, I got free tuition and a grant. I think it's wrong that people are now losing out.

You bother because you still earn more money.

Or because you otherwise wanted the job/promotion.

You can always give it up and go on the luxurious benefits, right?!

Fiscal drag. Yes it's annoying but that's a hangover from a Tory policy that the current government has hung onto because they inherited a huge mess.

You do keep the other half so are better off. But if you can manage without the pay rise, put everything you earn above £50k into a pension, you'll need to do a tax return to claim it though.

Fiscal drag is rubbish and is the direct hangover from furlough.

I don't know if you drive, but the electric car schemes are often now really good for bringing down tax, essentially meaning that a chunk of what you would have been paying in tax goes on a car fpr you, without costing you anything extra.

Seriously… universal credit it not earned income. Hardly the same thing is it.

How does that work @Hiddeninthetrees? When I had a company car, it increased my tax, not reduced it. A lot of people gave up their company cars when they got promoted into the higher rate tax band, because it doubled the amount of tax they paid which, on top of a hefty contribution for personal use, made it an expensive way to run a car.

I'm not the best at explaining it but roughly it's because the EV tax rate is only 4%. If you get one on a salary sacrifice scheme the cost is deducted before tax, so brings your overall tax down to below the threshold. Obviously it only makes sense if you actually need and want a car. It's to encourage people into using electric cars.

I am more than happy to pay tax and “pay my way” but as others have stated, I’m getting a bit sick of being seen as a cash cow with the biggest shoulders.

When I was 17, I had no idea that a student loan would mean that I paid 9% of my earnings over the threshold or that this threshold would be frozen so that it starts to impact on my wage significantly (it’s more than my car loan every month). None of my family have ever been to university or have earned into the higher tax band so we didn’t really have any idea what it would mean.

I also work in the NHS so every day see the appalling state of the public services so no I’m not “grateful” to be contributing, it’s a disgrace.

I looked and an electric car would still reduce my take home pay by 300+ compare to my car loan of £180 and it would reduce my pension so I don’t think it’s worth it for me at this point but thank you for the suggestion, I’ll take another look.

Why would it reduce your pension? It shouldn't affect that at all. When we worked it out, it means that the money you would have paid in tax is the bit that pays for your car. It should also bring your salary down enough that you get your personal allowance back and access to things like free childcare? I'm definitely not an expert, but it may be worth double checking and fully running the numbers to check.