AIBU to refuse extra hours when most of the pay goes in tax?

[oldFoolMe]

Would you work extra hours if you had to pay 67% tax on it? Thats without additional childcare, or commuting costs.

It's the poorest, lowest earners who are supporting the rest of us. They are paid poverty wages for some of the most important jobs eg care of the elderly, teaching assistants, nursing, refuse collection, bus drivers etc so the richest can get more profits which they off shore to foreign countries to avoid tax.

We need to equalise tax paid on unearned income like share holdings, with tax paid on earned income, doing jobs which are vital to our wellbeing.

The richest 5% of the population earn more than the 50% of the poorest. It's about time they paid their fair share. Is sitting watching your portfolio grow worth more than doing vital work for the population eg taxing the richest another 2% on their investment would barely be noticed by those earning well over £1million pa from investments.

I dropped hours at work to 32, partly to avoid the 40% tax band but also because I value time and relaxation over money. I did this a few years ago, during the last government. Tax bands have been around for a long time, it’s nothing new. Never felt the need to post about it on mumsnet though. Are you in genuine conflict / unsure about this?

Agree, better to focus on them than to have various points in the tax system where workers on Paye face ridiculous marginal rates.

“The richest 5% of the population earn more than the 50% of the poorest. It's about time they paid their fair share. Is sitting watching your portfolio grow worth more than doing vital work for the population eg taxing the richest another 2% on their investment would barely be noticed by those earning well over £1million pa from investments.”

The OP is not earning 1 million from investments though is she?
Also, whenever they go for the big dogs then they just pull their cash out of the country at a drop of a button now and the rest of us end up paying even more. Everyone tax resident in the UK is surely paying at least 45% tax if they are getting a high income? If they are investing it back into business and paying shares on Dividends and offshoring etc that is another matter.

Those with millions always find a way to structure around it in a legal way somehow.

In London, two professionals with an income of 200k who have to buy a house for 800k minimum now are NOT RICH. You just end up driving a lot of people out. Cost of living depends on location. The tax system is overly complex, unfair and does not take into account people’s actual cost of living, how many kids they have etc. Hence many people are cutting back on their full earning potential. That is happening. People are even telling their own kids to live in their garden (see my neighbour’s child living in a caravan with a medical degree). That is where we are at in this country right now.

No. I've cut my hours because 5 days pw isn't worth it.

This is exactly why me and the majority of female Drs I trained with are not full time, and some of the male ones too.
I earned approx £150k last year and paid £85k in tax. It doesn’t make sense to see less of my children, family, friends for a system that doesn’t even appreciate what I do.
I now decline the waiting list initiative sessions for locum pay as no point.

Come on OP. Get working. Someone has to pay for the freebie takers on benefits. What will they do if other people are not breaking their backs to support them.

But the stats won't include people who "could" earn over £100k but have chosen to reduce hours and refuse promotions etc so that they don't. So the stats show a warped view of the reality.

Some good points in this post.

Higher earners should pay more tax; it’s how a fair society works. I appreciate there are issues around cliff edges etc.

And lower earners should be paid fairly for the work they do - in work benefits shouldn’t really be a thing, people should just be paid properly.

I’m somewhere in the middle.

No, but OP and people like her are generally the one's who vote for political parties who refuse to implement wealth redistribution policies that would address the issue.

Also around 85% of billionaires reside in the country of their birth and 90% of UHNW individuals stay put in the country they earned their money in, so this narrative of "oh they'll just move if we tax them" is a myth, and even if it wasn't, it wouldn't be hard to put in policies that address that too (a la USA).

Couldn't you have increased your pension contributions instead?

Thats not to say there isn't value in working less days though.

@ElizaMulvil Nurses? They start on around £32,000. They can progress to much more if they wish to as there’s a career structure. Bus drivers and train drivers are not low paid either.

I use ISAs for shares but you fundamentally misunderstand economics if you want people to pull out from investing, which is what would happen. It’s our money that provides investment into companies. These shares are also owned by pension funds. Anyone who has a pension is an investor. It is vital we support industry and jobs. If we take all saving and investing incentive away, we get even less growth and less earnings for employees because the economy contracts. We cannot afford the system we have that pays generously to some state workers and incredibly generously to their pensions. Maybe you need to look at all the costs associated with state employment and not look at TA wages when many of these are part time, term time only jobs and cannot be the same as teachers!

Yeah its the wrong stat. Its like on threads about the impact of marriage, someone brings up IHT and someone else says only 4% of people pay it. The point being that we don't see the people who've done something that avoids them being in that group. Much harder to measure!

No chance at all.

This is why I closed down my side hustle (not in the UK). I set it up properly, not cash in hand like many of my friends. I just did the calculations for my accountant for last year, and I paid 68% tax/social security. What on earth is the point!? So I just stopped.

If I was in charge:

I would emphasise that the reason for these tax structures is to help create a fairer society by making it more economical for a business to employ 2 people working 30 hours a week and earning £60k each rather than getting one person to work 60 hours a week and giving them £120k. More people earning comfortably, and more people with the leisure time to do more than just work and spend time with volunteering, being creative, investing in their own and their family's mental health, and making the lifestyle changes that we all know are better for us but don't have time to implement when we are working every hour we can.

I would introduce a £25k "upskilling" allowance where anyone with an fte salary of £100k or more can raise the threshold for the personal allowance withdrawal to kick in by £5k for each documented 24 days per year (ie half a day per week year-round) spent mentoring and supporting middle-income middle-seniority personnel to be able to take on those £100k+ fte salary-level responsibilities (up to a maximum of £25k), and beyond that do more to incentivise and promote a culture of part-time working to be a default as soon as you reach the 40% higher rate tax band.

In a free market economy, limited resources have their price set by the market as the highest amount that a sufficient number of people can afford to pay. Too many people being paid £100k+ in London leads to a silly situation where it actually becomes impossible to support a reasonable standard of living in London on any less. If we disincentivise earning at that level and have double the number of people earning perfectly decent but lower salaries, costs have to fall.

@CoverLikelyZebra Thank you so much for articulating what I always think when I read these threads in your first paragraph. Your other ideas are good too. Please can you be in charge?

It crosses my mind, but I’ve already done all i can to avoid going into a higher tax bracket. I pay into my pension, lease a car via salary sacrifice and have the maximum I’m able to buy as holiday. The extra money to take on the extra stress doesn’t feel worth it, but I’m lucky in that i can live in my wage and I don’t have to work more, I’m able to cut back without sacrificing too much as the costs of everything increase.

I earned approx £150k last year and paid £85k in tax.

This cannot be true. Even without any deductions apart from your personal tax allowance on a salary of £150K you would pay £53,703 income tax & £5,010 National Insurance for a total of just under £59K tax. There is no way you paid £85K in tax unless there were arrears from previous years.

https://www.thesalarycalculator.co.uk/salary.php

Probably she has student loan tax to pay as well

Crossed post. I was thinking should be more like 60k tax

I have two children in nursery. I lose 30 free hours + tax free childcare for one (value: £15k) and 15 free hours and tax-free childcare for the other (value:£10k). This is a total net cost to me of £25,000.

Over £100k I pay tax at rates from 62% (£100-125k) to 47% (£125k+). Between £100-155k I therefore take home a bit over £24k.

So I need to earn £155k to make up for the lost benefits £100k.

I live in London and this is a hot topic - you either need to be able to blast past it (tiny numbers of people) or salary sacrifice down to £100k. This leaves people feeling disgruntled as having to cap your salary at £100k for several years while living in an expensive place and of course inflation means costs continue to increase.

Probably she has student loan tax to pay as well

Student loan repayments are not a tax but in any case wouldn't be more than around £10K per year on a salary of £150K. PP claimed to pay £85K in tax on an income of £150K which cannot be true.

You (or whoever you mean) aren't "the rich" they are talking about.

They're talking millionaires and billionaires exploiting tax loopholes, not earners on PAYE