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

Labour used to be for the working folk, not it is for the non-contributing folk, you are right.

I feel your pain ! Same situation- public sector therefore my pension fell also into the next bracket so i’m actually worse off by about £70 a month prior to promotion 😵‍💫 amazing!

My husband also dropped down to 4 days a week to save having to pay so much tax.

Then he realised that this would negatively impact his pension because his pension was worked out on the 3 best paid years (NHS).

So he went back to full time for his last 3 years before retiring ... just something to think about though you sound a long way off retiring.

The numbers of this don’t add up.

plan 1 student loans stopped in 2012-13 (unless you’re in NI?)

and I can’t think of any nhs professions that require you to have multiple unfunded degrees that pay you less than £40k once you get into them.

I was on a plan 1 and the repayment was made absolutely clear that it was 9% over threshold until you cleared it.

The situation is not sustainable. The welfare bill is not sustainable.
But MN always tells high earners to pop off to Dubai because working hard and earning money is a cardinal sin.

I say this as a lifelong Labour voter.

If all the interest in your savings is taxed at 45%, that suggests you are in sore need of some financial literacy. Get yourself to a financial adviser.

Can you elaborate on why she is wrong?

There is no tax free savings for income >£125k and so this will be taxed at 45%.

Yes you can use an ISA - but given the pp is trying to buy a house, they may have more cash than that.

Rishi Sunak paid an effective tax rate of 23% when he last declared it. Seem wealthy Tories know how to pay a lot less tax than ordinary people. And of course when Farage gets £5m its an untaxable gift (apparantly) Rishi Sunak paid effective tax rate of 23% on £2.2m income last year | Rishi Sunak | The Guardian

Also, they do, the really high earners tend to be very global people. And if they go, they take all their tax paying capacity with them. And a really high earner might pay as much income tax as everyone in an average town in the UK so we really need them not to leave.

Presumably you have made use of government services on your way up? University education subsidised by the taxpayer, healthcare delivered by the taxpayer, roads paid for by tax payer, electricity, gas and water supplies all subsidised by the tax payer.
Well, now you are paying towards them more than you were.

My DS has told me several people he knows have dropped a day or two a week to reduce tax. He says he can see public services and infrastructure are under huge strain. He pays for a private dentist and has seen a GP privately. He’s fortunate to be able to do that.
Labour have few options, our debt is now trillions, we hardly make anything here anymore. We need a serious discussion about welfare spending and supporting business

Really sorry if I’m being dim about this - but does this mean that if your take home gross salary is, for example, 99k - you will actually take home LESS than if you earn 101k?

And if you lose the 12k personal allowance, what gross salary do you need to be on to make that up? 112k?

Such nonsense. Look at what came before. It wasn't socialism that started this.

These are deemed gains though, not income. A low-income person would have paid 10% on gains at that time, vs 20% for a high-income person.

I take the wider point that it’s only the rich who make serious amounts of money in gains anyway.

This is still a LOT more than most people and he won't be using state schools. He will also be supporting the economy more because his wife buys lovely things (from photos I saw when he was PM) and he wears lovely suits that I suspect he does not wear into the ground. He will be employing cleaners, nannies, a driver. They will all be paying tax.

Don’t forget free school meals; free adult dentistry and prescriptions; no travel to work costs; access to many discounted children’s clubs (our leisure centre advertises them); no need for smart work clothes; Cold Weather payments. Plus as a SAHM shopping around can save on food costs etc. I’m long retired, worked since my DC were small, but as an ex housing worker, and a volunteer for a charity, I’ve met many women who could have worked but preferred the option not to - reason given - because they had children. Some were also being supported by the children's father/s.

The real hardship comes later, when they no longer have dependent children, and are on much reduced benefits, often in a property that is too big, and their housing benefit is reduced due to the what is known as ‘bedroom tax’. Hard to start at forty or older with no work history.

As others I’m happy to shoulder the tax burden , but I feel that how that money is spent doesn’t feel right.

I want a disabled person to have the right support and financial help needed.

What does upset me is when I see a person choosing to working part time with top ups from UC, then judging others having to go to FT nursery saying they must be a awful mother….those parents working FT pays into the system that pays your UC.

That feels quite shit to be honest, and I’m seeing more of those high income people reducing hours and retiring a little earlier. Which impacts the money going into the welfare system.

We have to all pay our taxes fairly (billionaires as well) but we can’t keep pointing and asking one group, it’s a pyramid system and it’s creaking badly.

Thank socialism for that x

Just wait until you earn £100k and lose your personal allowance… and take home LESS than before!

“We need a serious discussion about welfare spending and supporting business”

That ship appears to have sailed under Labour.

There are other tax-free vehicles she can use. I won't elaborate since I'm not in the business of giving free financial advice. A good financial advisor can help her.

You lose £1 of personal allowance for every £2 of earnings between £100-125k.

The childcare is the killer as it’s removed at a cliff edge. My childcare is worth ~£2k a month of tax free childcare and free hours (the actual bill is more than double that…).

So if I earn a penny over £100k I lose ~£25k net. To earn that back, I need to earn ~£155k.

Quite. School meals (or milk?) were introduced when the Boer War showed that most British men of fighting age were malnourished and unable to fight. They wouldnt have been fighting for their freedom, they would have been fighting for the rich men of Britain.
As today, the rich men made the state pay to fix their problem, so they could get richer.

Yes this, make voluntary contributions to your pension to keep it below the threshold, the gov gives you the tax back in to your pension. Also keeps you below the child benefit threshold and you get a large tax free allowance for savings interest (1000 instead of 500 I think)

The only other tax free vehicle is premium bonds.

You don’t need a financial advisor for this kind of advice at this level.