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.

I’d just pay the extra into my pension so i can retire earlier. Unless you have already maxed out your annual allowance (or earn so much that your annual allowance is tapered)

It’s a graduate tax that only the poorer kids pay. My wording was intentional

It’s a graduate tax that only the poorer kids pay. My wording was intentional

The poorer kids don't pay anything. Someone on £150K salary will repay about £10K per year. It's still not a tax even if it's deducted as a percentage of income.

You think? You really think so?

If Keir and Rachel thought a wealth tax had a hope of working, why aren’t they doing it? If the economic advisors thought it would work it would silence SO MANY if their detractors. Guess what? All the research shows it would be an unmitigated disaster.

Cant you just put all the increase into your pension?

The stats only include ‘adjusted net income’ of over £100k I understand - so they massively understate it as a lot of people on those salaries use salary sacrifice for pension, invest in a SIPP and do a tax return, buy holiday etc to bring them under the £100k on a net adjusted basis.

Let alone all the people that actually reduce down to part time, and thus have a real salary of under £100k.

The crazy thing is it would actually be a net positive in terms of increased tax take to remove that 62% rate. As people wouldn’t take those measures

Its crazy t

I work a 4 day week because of the 100k personal allowance clawback. I use my pension contributions to stay around 100k.

If i worked it, I would receive around £650 a month more net, and out of that I would spend:
£150 a month on the extra train travel to work
£200 a month on extra childcare (wraparound for two kids an extra day a week)
£250 for a cleaner 3 hours a week to replace the cleaning I do at home working part time

So I'd actually keep 50 quid a month for more stress, less time with my children. Its so not worth it.

The economy is not “closed”. More regulation and tax and a descending pound simply translates to foreign investors buying up on the cheap and asset stripping what they can. Be that property, companies, private schools, care home bonanza.

And political turmoil translates to hedge fund bonanza. The idealists never ever learn that simple humans are simple, they work on carrot not stick. None of it is complicated.
Except people sitting in ivory towers who fancy themselves chess masters after their Oxford/Cambridge student union days and Mummy and Daddy telling them how clever they are - tend to underestimate simple human behaviour, time and again.

Yes I am one of the many people buying holiday etc to keep below the level.

Maybe. Depends how much it was extra in cash in my pocket, whether i needed even a bit of extra money, whether I loved my job, whether there was a good opportunity for me to progress in my career and whether I felt the extra hours didn't negatively affect my family life.

I'd put it in my pension, tax free.

That’s OK until you have maxed that out.

I lost the thick end of 100k bonus payments between the time my DS was born and the time he started school due to the ridiculous cliff edge rules.

It is true honestly.
I paid £50k this Jan and will pay another £35k in July on account.
Obviously pension and professional expenses are taken off the top figure.
I don’t have a student loan.
The year before total earning was slightly less so I will have paid a bit extra on account but not loads more, maybe a couple of thousand to cover that short fall.
The other thing that affects me at the moment is the base reform period changing from April 2024, so this involves me paying an extra 8-10k per year until 2029 (basically instead of paying an extra 12 month of tax upfront we can split it over 5 years) so had it not been for this my bill would have been 75ish K.
I’ve been a Dr for 20 years and have given up trying to understand it as it varies so much year by year. My accountant assures me it’s correct.
But it doesn’t change the fact that this system penalises me to work more especially now my youngest is at school and I have a free day in the week.

I am a retired A&E consultant so aware of how doctors are paid. There is still no way you are paying £85K of tax on a salary of £150K. You can confirm this by using the Salary Calculator that I linked to. Tax & NI are under £59K on a salary of £150K. If you are paying an extra £26K per year in tax this can only be because of arrears.

Well as a retired A&E consultant you won’t be aware of how self employed GP partners are paid then will you?
(I do also have a hospital clinic role but that is paid in the usual PAYE way and taken into account on the tax return)

Also, I’m not paid in a salary way as such so that calculator is useless to me

Trouble is it costs more per head of personnel. They need pensions and management and some accommodation and equipment. Easier to flog one highly paid person to do the work of two if you can get away with it.
I think about this a lot. Technology might have been expected to deliver a 3 day week for everyone but instead it’s long hours for some and unemployment on benefits for many. Companies need fewer staff but they don’t react by getting less out of the staff they do have!

Also, I’m not paid in a salary way as such so that calculator is useless to me

It gives a good indicator as to the maximum amount of tax you could possibly pay. If you are a GP Partner earning £150K you will pay less tax than a consultant on a £150K salary.

Well as a retired A&E consultant you won’t be aware of how self employed GP partners are paid then will you

You would be wrong in that assumption. I know how GP Partners are paid & taxed. For a given income as a self-employed GP you will pay less tax than a consultant on PAYE.

I’d also say the calculators are not that accurate in general, based on salary. I’m not sure why. They already come out more generously and I get less take home in practice.

Also, I think a lot of people are looking at gross salary only when they state their tax. It often ends up being quite a bit more tax paid, as you’re taxed on the private healthcare, dental care, any wellbeing benefits provided at work etc

Well I’ve looked at that calculator and it is clearly meant for people who are employed.
Self employed people pay “on account” towards the next bill so that is where the discrepancy is.
Paying towards the next bill isn’t voluntary so it’s still included in the figures required to be paid each 6 months.

Perhaps another self employed person could comment as it feels like you’re either insinuating I’m making it all up or trying to undermine me.

”Additional hours” no, because I am salaried not hourly paid and, like most people earning above £100k I work more than my contracted hours anyway.

I spent about 3 years stuck in the Scottish marginal tax bracket hell, and as a single income family we needed the extra money so, at the time, I couldn’t afford to put it in my pension.

However, it paid off career- wise and I now earn over £250k, so I am glad I didn’t restrict my career just to avoid paying tax.

I just think that you must be mistaken in your figures. Paying "on account" doesn't mean paying any more tax it's just that self-employed used to pay tax in arrears on previous tax year but now pay on account in current tax year.

Calculating tax as PAYE will be the absolute worst case scenario. As self-employed your tax will be almost certainly be less than PAYE for same income & definitely will not be more. On an income of £150K you should pay no more than £60K in tax whether PAYE or self-employed.

I think you misunderstand. The first year that you pay on account, you are paying approx. 1.5x your tax obligation. It will adjust in future years but the first year you pay all the tax due in the previous tax year plus 50% of the expected tax due in the current bill. (I’m not self employed but had a rental property where this tipped us into payment on account)

If you get to six figures you just put more into your pension so that you fall below the threshold, or ask for a chunky payrise as everyone knows about the effective tax rate.