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

Because you get to keep the other 49%

All this points towards a shift in tax brackets so there is less of a cliff edge so perhaps 20 going to 25pc at £40k, 27pc at £45k....

There are others.

No, many people can work this out without needing a financial advisor. Seems the PP isn't one of them though.

I’ve done the same. It’s worth it!

And dp who is extremely skilled and works in private company earning over £100k has “bought” holiday through his company’s holiday purchase scheme so he gets an extra three weeks off work this year.

The result? We are two HIGHLY productive individuals now contributing less to the economy because it’s not worth our while. Why stress out for 55 hours a week like we use to?

My company btw hasn’t given a cost of living of payrise to anyone since 2021 and announced same again this year.

Oh and I work in the finance team where I have the pleasure of seeing the colossal bonuses that our executives earn.

The problem is capitalism is failing us, and we are all arguing amongst ourselves over the scrap at the bottom.

Socialism is definitely not at work.

Right so higher earners have lots of ways they can grow their cash tax free, but you can’t actually elaborate on what those are.

Ok - except the OP was living on less
on a lower salary. So just put in pension contributions to match that, save the tax, live off the same money as before and OP is still better off because that pension money can be accessed later.
or if someone REALLY resents paying the higher rate of tax on the extra money earned then drop down on salary or hours.
As a highest rate tax payer do I want my tax money going on healthy working age people who aren’t arsed working? No. But do I want U.K. children to have food, education, healthcare, decent housing. - yes. Do I want transport systems, nice public spaces, playgrounds, leisure centres, the NHS, my DParents to get their state pensions, public services - yes. Do I think we need a military? Yes.
We don’t get to choose where the money goes exactly but I do know that not all of my tax money goes to ‘scroungers’…
And OP is paying tax on EXTRA money earned. Seems they’re MOST pissed off at paying money they BORROWED and somehow that’s suddenly a ‘tax’.

Well don’t Chocolate for working hard and doing well. I don’t blame you at all for feeling hacked off with it all.

Please stop making this into a benefits bashing thread.

You have no idea how poor the other half of the country live.

When I was on benefits as a single parent I had to choose between eating myself or having hot water.
I had a mattress on the floor as my bed and seating area for years and no TV or anything.

There are children having no clean clothes, going hungry and not being able to eat breakfast, yet you’re moaning about their parents getting £10 a week free school meals so they don’t starve and can concentrate in class.
And these are the people that you are suggesting are better off than receiving £3k+ a month on a £50k salary.

But OP isn’t complaining about paying tax at all - she’s complaining about now paying a 51% rate on any additional pound earned.

More than half of any additional earnings is taken through PAYE.

That is very significant in terms of the motivation to do more work - earn £1000 extra on the basic rate you take home £720. Earn an extra £1000 in OP’s situation and you take home £490.

And that’s ignoring all the additional cost to employer, employers NI etc.

As for ‘but she was living on less’. She might have aspirations to buy a home, have a child etc. It is typically expected as you go through your career you earn more money to support a better lifestyle eg having a house and kids. This expectation everyone should be simperingly grateful to be earning beyond the minimum wage is bizarre.

I can elaborate but, as I've already explained, I'm choosing not to. It's not difficult to understand.

It was exactly socialism that started this.

I recently went over the 40% threshold. It doesn’t massively bother me. I’m still making more money. I accept I have to pay taxes for the benefit of society.

Put the amount you are over the 20% bracket into your pension.

Yeah, my 2 adult DC felt like this when they hit the higher tax bracket 2-3 years ago (they are both around 30 y.o.) But it didn't take long for their salary to go up and up with bonuses and promotions and so on... They're glad they took the promotions/higher income now, because they're near to 6-figures now (not London,) and are doing well.

😂 ok

You'll be flamed on here but I get it. I earn 99k for 4 days a week and have no plans to go back to full-time as it wouldn't be worth it. Yes I could pay excess into pension, but the future is guaranteed to nobody, I'd rather enjoy my time now with my family.

YANBU.
your losing half your income and too much of that goes to people who either choose not work or work part time. As others have said pension is the best option.

You actually think I'm going to provide free financial advice on a public forum out of the goodness of my heart? Laugh away! The joke is on you.

If you are an employee, you can pay more into your pension to reduce your taxable income to £50k and you will be paying 20% again.

I’m not sure ‘describing what tax-free savings options there are for higher earners’ counts as providing financial advice really.

You can’t claim there’s all sorts of ways to be avoiding tax on savings and then be unable to actually provide any examples of how this is done.

They call it the £100k cliff edge and it’s why if you look at the numbers there are many people on 99k (well maybe not “many”, but relatively speaking) and then fewer above that. The loss of the personal allowance is tapered off actually, sorry I got that wrong, but for each £1 you earn over 100k you lose a bit more personal allowance and you also pay 40% income tax, so effectively you pay 60% tax between 100 and 125k by which point you’ve lost the whole
personal allowance and you pay 45% income tax only.

so you can see why a promotion with more hours and responsibility that takes you from 99k to 109k salary might not feel worth it when you take home only £4k of that extra £10k that’s in your gross salary.

If people could see improvements in services, in their personal lives I think many wouldn’t begrudge paying higher taxes

but none of us are and now struggling to make ends meet is hitting upper middle earners

why a mess this country is in, I don’t blame people going part time and getting UC top ups

Yep, until all the high earners leave or reduce their hours because they are paying too much tax.

Let's see what the socialists do then. It will serve them right when they have to start paying for things themselves.

@Feelslikeaneternity and with plan 2 loans, we are now seeing people getting to that earning level so it’s a 71% rate - not including pension contributions

Yep this is us.
No I won’t increase my hours.
9% mandatory pension.

No free 30 hours childcare either.
Costs ~£900/month for 3 days (with the 20% tax free bit)
So that’s 11,100 a year for childcare. Which at 67% tax + pension = £44,000

44000 pound pay rise needed just to equal something I’d get for free in England.

Dont move to Scotland!!!!!