What’s the point in earning above higher tax threshold?

[Pippippipi]

Really what’s the point? Anything above 43k till 50k ie uk high tax threshold has such high deductions it’s terrifying. 42% tax, 8% NI, non negotiable 11% superannuation pensions payment leaving me with 39% to take home. Even worse if you’ve student loan payments.

People in very normal jobs with responsibilities are being dragged into these thresholds, it doesn’t feel fair in anyway.

Whilst I don't disagree, the higher tax only applies to the portion of your wage that falls above the higher wage limit, it doesn't apply to everything that falls above your personal allowance.

As someone who was once well into that bracket, I was happy to earn well and happy to contribute to society through taxation. DH is on around £200k and while he pays a heck of a lot of tax he also takes home a lot of money. Someone’s got to do it and if I get offered a job in that bracket I’ll be taking it.

It's still more money in your pocket. What's terrifying about paying your way in society?

The pension contributions surely are “negotiable”. You can not pay them, it’s still money that you’re getting, just in future.

Otherwise, you earn more than the threshold to get the 50% you do take home. It’s still more money than not having it.

Not negotiable, I should make clearer, for example as nhs staff I cannot control the percentage deduction. It’s a set value, you don’t get to pick.

im also meaning specifically earners between the 43 and 50K were there is a 50% marginal tax rate. This isn’t progressive taxation.

If you would be happy with eg a two grand payrise, which I think most people would, then you could be equally happy with a four grand payrise over the threshold?

I’m still taking home more than I would under the threshold, so I’m happy.

Over approx .50k you only pay 2% National insurance so the leap to higher overall taxes isn't as big as you think. Income tax and NI combined go from 28% to 40%, not 28% to 48%

For me, it means getting to put more aside into pensions for old age. Which gives me a privileged position that many people do not have.

You take home more wages. Hth

The first 12570 is free of tax.
12571 to 50270 you pay 20% tax. You only pay 40% tax on anything over 50270.
If you earn 52000, consider putting the additional 1730 into your pension to avoid higher rate taxation.

You definitely do not only get 39% of your income.

Not really, if you were unemployed and on benefits you’d get it all free anyway.

I am someone who is fortunate enough to earn into the (Scottish) higher rates. Which are higher/more progressive than you have in England, Wales and Northern Ireland - for me personally by over £2k a year*. I also pay higher property taxes as well.
For me:

• it is only on the top proportion and it is relatively small proportion of my income.
• I am happy to contribute to society. I type this looking out a window at a brand new school being built - and my LBTT (Stamp Duty) when I moved in a couple of months ago is helping pay for it. Just one example of what society gets from my tax money.
• I am already earning a huge amount of money before this kicks in, so the pain is no where as bad as if I was a low earner paying more tax. I have broader shoulders, therefore I pay more tax. I do not have a problem with this.
• Even with a huge tax burden on some of my earnings, I have more than majority of people in the UK and feel fortunate to have what I do.

*Source : obr.uk/box/income-tax-policy-in-the-scottish-budget-2024/

This is it, exactly. If you are worried about marginal tax eating into your payrise, just pay it into your pension.

I do agree though that there is a fiscal drag of more and more people in “normal” jobs into higher rates of tax.

You would only get a small amount, only just enough to live off. A private pension on top of state pension makes all the difference.

Do you understand what ‘progressive taxation’ actually means, OP?

That’s in England. In Scotland the rates and thresholds are different so you can end up paying higher rate tax and higher rate NI at the same time, resulting in very high marginal rates. This seems to be the position OP is in.

@Minjou by this logic people should be happy with even a 90% tax rate, as it’s still more money in their pockets and they would be “paying their way.” But almost everybody would agree that would be absurd and unjust. 50% marginal rate on a 44k income seems pretty high to me.

YANBU OP.

It's worse at 100k-120k if you have kids in childcare. Due to loss of childcare benefits, you actually can end up with less (once factoring in nursery costs) than before a pay rise (when you got 30 free hours).

Not that I'm in that bracket or crying for them but that's a true cliff edge.

Load the pension get 40% tax relief and retire early

FFS I earn more than you and an happy to contribute more. Your actual wages come from tax!

OP is in Scotland so pays 42% at £43000. But as others have said you still get more money to take home just more if what you earn above £43k is taxed.
I'm in Scotland so feel the same. If we had decent services I wouldn't mind paying more tax but we don't so I do really object.

you get more money

gosh didn’t realise it was possible to earn so much with so little maths capability

Except the left are frothing at the mouth to make it means tested.

You get more money.