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.

Oh my, for those questioning my maths skills I was referring to the specific bracket between 43 and 50k where yes you do pay 50% tax between tax and ni before it drops back to 44% combined after 50K. Therefore the opposite of progressive!

And yes I’m aware that this tax rate is only applied above each threshold and that income below it isn’t taxed at that rate.

As more and more are dragged into this threshold with fiscal drag maybe there will be more realisation of this loophole.

I pay anything in the 42% bracket into a SIPP... 42% tax relief is not to be sniffed at!

Eg. A £12,500 boost to pension costs only £7250 when all tax relief is applied (SIPP apply 20% automatically, I claim the other 22% relief through self assessment which I have to complete anyway regardless pension contributions. )

This isn’t the case in Scotland. You lose childcare vouchers at that rate but you do get free hours. You face a higher marginal tax rate here though at that point. 65% instead of 62%.

I’d just settle for the same income tax rates and threasholds as England. I’d be so much better off. What the hell do the Scottish government do with it all? How can they waste SO MUCH money?

was referring to the specific bracket between 43 and 50k where yes you do pay 50% tax between tax and ni before it drops back to 44% combined after 50K. Therefore the opposite of progressive!

can you explain this? I think you’re mistaken.

Loads of issues with how income tax works (largely due to the government not wanting to be seen to have put taxes up and therefore relying on fiscal drag) but this doesn’t seem to be one of them.

I’m not aware of this ‘thing’ between 43k and 50k, please can someone explain it?

This is why I work part time OP. Yes I could make pension contributions but I’d rather have the time with my kids now. The extra I would take home for full time work is not worth the trade off of my time.

Because they are socialist and they don’t care. The state sector is huge and bloated and is paying the op! Plus those whopping pensions others can only dream about, not to mention the huge amount the state puts in to them. Too bad there’s anomalies. It’s made up in other ways by huge pension contributions by the government which standard workers don’t get! It’s them who are facing the real burdock of this . Not the government employees!

I don't mind paying the tax, someone's got to and by the time 40% kicks in I gave enough to live well on.

I do agree that if the salary increase comes with more stress or responsibility then being in that tax bracket makes a difference.

I reduced my days when I could. 20% fewer hours without losing 20% of my take home pay. (obviously it's not really like that and I still do pretty much the full time job).

NI is set by the uk government and aligns with the rest of uk tax thresholds. Therefore you pay 8% up to 50k ( the rest of uk high tax threshold). So once you hit 43k in Scotland your earnings between this and the 50 k rest of uk threshold are deducted at 42% tax plus 8% ni. Plus whatever pension and student loan deduction you have. Plus you loose entitlement to the marriage transfer allowance where a lower earning partner can transfer some of their tax free allowance.

You see the issue is that some people aren’t getting enough to live well on. Earn £50k, you ought to have a good life, you’d have thought. It’s pretty much impossible to rent a 1 bed flat for less than £1k in Edinburgh, then council tax, utilities, broadband, phone, student loan repayments, insurance, pension, any car fees. You may have a stressful job with lots of responsibilities and not much money left at the end of the month, and yet the Scottish government tax you like you’re a billionaire. I can see why resentment might build.

It's a lot. I think the higher tax rate should be applied to much higher incomes.

I guess it's more what we think is value for money, if I was getting excellent public services I wouldn't begrudge high or even higher taxes. But when for example your kids are waiting years for health treatment, if public transport is rubbish, you broke your leg on pavements that are no longer gritted, the library and pools are shut - then people suddenly resent paying so much in tax.

And OP, apologies I wasn't meaning to question your maths skills, it's just something that people sometimes overlook.

Someone on SM has worked out that to change the Scottish tax rates and thresholds back to the UK rates would cost £1bn, which isn’t much more than the £900m cost of ‘free’ tuition.

You could put more money into a pension though to get out of the tax trap.

And national insurance isn’t progressive taxation nor does it try to be. It’s a higher rate for lower earners, which is what causes this issue.

Because you’d earn more money? What a bizarre question.

It's still £500 more for me to do an extra day at work ( teacher) so still a decent difference.

Other than to have more money, you mean?

I won’t have to worry about the age I can retire, or how much money I’ll have to live on. Surely we can all see the pros of that!

This again?

Did you mean to be so rude?

The pension deductions are for your benefit and not compulsory. If you don't want it stop paying it.

How would you pay for the NHS that employs you, if not like this?

"Taxes, after all, are dues that we pay for the privileges of membership in an organized society."
Franklin D. Roosevelt

I have genuinely always considered my tax bill something that comes with the privilege of earning well (higher rate taxpayer too) and a necessary lart of contributing to society. In other counties e.g. Scandinavia, which is always held up as some sort of Eutopia, they understand that. In the UK most will do all they can to contribute as little as possible.

Scary that people earning well in the taxpayer funded NHS feel that way. What hope is there?

Non promoted teachers just got a pay rise putting us at just over 52K now (more than our English counterparts) we are taxed more though.

I read somewhere that Scotland does not have enough HRTs, in fact it does not have enough tax payers and 50% of the population are on benefits.

In my school I would say the major of parents do not work probably as it pays more for them not to work, this to me is a huge problem in Scotland, low wages, high childcare costs means that families are better off on benefits or only working 16 hours a week.

When people are actually working they often need top ups from the government as their wages aren’t enough to live on which seems ridiculous. Even two decent salaries families are struggling now. For years I stayed at home as we couldn’t afford childcare.

Absolutely! I mean that covers everyone doesn’t it? Everyone should be paying there way?….
of course SNP are ramping up the taxes, how else are they going to keep funding the never ending benefit increases?…. The new child payment up to 40 a week now?

Ok at no point have I said I object to paying tax but I don’t think it’s unreasonable to be unhappy about paying a higher marginal rate than people earning more than me.

43-50k is a good wage but doesn’t go far when it’s the whole family income. adjusted for inflation, the higher tax threshold should be close to 60K by now but has been frozen for many years. Most people in this threshold don’t have a lot of leeway In their budget if single income.