TAX ?!?!

Theophany said:
You're talking about people who earn ridiculous sums of money - they can afford the tax rates. I'm talking about households on £100-150k p/a. These aren't the super rich. These aren't people living in Monaco. They're not non-doms or tax exiles. Get your head out of your ass. :rolleyes:
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head out of my ass? I was replying on the basis that if you earn over 100k you pay 61.5% total tax + NI, where as the actual figure is 52% over £150k.

If you earn 100k, total tax is 36% If you earn 150k your total tax is 39.6%

And that's not for households that is for individuals.

2 person household at 50k each is 30% tax, at 75k each it is 33% total.

Whats wrong with that? might as well get paid 20k then you'd only have to pay 20% tax
 
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platinum87 said:
head out of my ass? I was replying on the basis that if you earn over 100k you pay 61.5% total tax + NI, where as the actual figure is 52% over £150k.

If you earn 100k, total tax is 36% If you earn 150k your total tax is 39.6%

And that's not for households that is for individuals.

Whats wrong with that? might as well get paid 20k then you'd only have to pay 20% tax
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What??

I specifically said that over £100k your marginal rate of tax is 61.5%. This 'might as well earn 20k' is an irrelevance.
 
platinum87 said:
You can say marginally all you want, i can say muffins, but both of these make no difference when it cant be 61.5 because it is actually 52
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Don't bank on being an accountant. :rolleyes:

I said marginal rates, i.e. the rate of tax incurred on each pound above a certain level. You were talking about something entirely different and saying that I'm wrong on that basis, which doesn't follow. I don't see what you find so difficult to understand here.
 
Theophany said:
Don't bank on being an accountant. :rolleyes:

I said marginal rates, i.e. the rate of tax incurred on each pound above a certain level. You were talking about something entirely different and saying that I'm wrong on that basis, which doesn't follow. I don't see what you find so difficult to understand here.
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Likewise, because if you earn £150,001, as i've said above your total tax would be 39.6%, your marginal tax on the last £1 would be 52%, as in 50% tax and 2% national insurance.

So explain to me how the marginal tax rate is 61.5% in any calculation?

Did you just forget that NI is 2% above 40k or so or what?
 
platinum87 said:
Likewise, because if you earn £150,001, as i've said above your total tax would be 39.6%, your marginal tax on the last £1 would be 52%, as in 50% tax and 2% national insurance.

So explain to me how the marginal tax rate is 61.5% in any calculation?
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No, it can be marginal and at marginal the rate is closer to 62% in the region of £100k-£116k, you can argue as much as you like but semantically and technically you are wrong.

Tax rate:

40% IT
2% NI
£1 PA lost for every £2 over £100k (effectively losing out 20% tax relief)

Total marginal tax rate 62%.
 
platinum87 said:
Likewise, because if you earn £150,001, as i've said above your total tax would be 39.6%, your marginal tax on the last £1 would be 52%, as in 50% tax and 2% national insurance.

So explain to me how the marginal tax rate is 61.5% in any calculation?
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For every £1 you earn over £100,000 gross to ~£116,000, it nets down to 38p. Do. The. Math.
 
platinum87 said:
I did the math, now were on 100k to 100,001 the marginal tax rate is 42%, seeing as how if you earn an extra £1 you will gain £0.58?

:confused::confused::confused:
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It isn't at 42% because you're losing 50p of personal allowance for each £1 extra of earnings, which means that the ~£8,000 that was previously tax free is now being hit for 20%.

It's a real *******ised way of doing it, but once you work out the tax due, you only get 38p in the £1.
 
platinum87 said:
I did the math, now were on 100k to 100,001 the marginal tax rate is 42%, seeing as how if you earn an extra £1 you will gain £0.58?

:confused::confused::confused:
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Every £2 above gets taxed at 40% not tax free, so effectively every £1 above has an additional 20% tax from losing personal allowance.
 
PLATINUM87 said:
Maybe you should look into paying less tax somehow
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Theophany said:
If only I earned that much. I just look after my clients who do.
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Ha - I echo that sentiment, although in my case they are 'customers'.

There are all sorts of ways people try to achieve this, although avoidance is becoming more and more difficult, and people in general now see avoidance as a bad thing.

The legitimate ways of mitigating the higher rates of tax are things like pension payments and charitable donations, and various other schemes i.e Enterprise Investment Schemes, and VCT's.

This whole thread just reinforces my views that tax should be taught at school/college. There are so many people who have absolutely no understanding of how it works, and therefore are unable to notice when things go wrong, resulting in them either paying too much, and having to reclaim it, or not paying enough, and then getting upset when they have to pay it back!
 
chippie said:
Ha - I echo that sentiment, although in my case they are 'customers'.

There are all sorts of ways people try to achieve this, although avoidance is becoming more and more difficult, and people in general now see avoidance as a bad thing.

The legitimate ways of mitigating the higher rates of tax are things like pension payments and charitable donations, and various other schemes i.e Enterprise Investment Schemes, and VCT's.

This whole thread just reinforces my views that tax should be taught at school/college. There are so many people who have absolutely no understanding of how it works, and therefore are unable to notice when things go wrong, resulting in them either paying too much, and having to reclaim it, or not paying enough, and then getting upset when they have to pay it back!
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Tbh tax is easy enough to pick up, though it can be difficult to get your head round to begin with. I worked as a paraplanner in my teens and now flog all manner of tax avoidance vehicles to IFAs and their wealthy clients for a living. Big business at the moment seems to be in PETs - nobody wants to get hit by the dreaded death tax, especially if they cut the nil rate band.

What are you in Chippie?
 
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