Would 'tax' be a good enough and non-specific answer??
It would be fair to say that I'm on the other side of the fence to you
In another life we could have been great friends
TAX ?!?!
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In another life we could have been great friends
No.
If you earn £150,000 you pay a total of 39.64% in deductions, even if you magically add on the personal allowance loss as additional tax it's still only 45.05% total lost.
The personal allowance is a set amount, it can't be applied as a tax across all earnings (as a loss), on-top of that you still get the lower tax bands (20% up to the limit) which reduces it further.
Even on an annual salary of £500k PA you still only pay 49.91% tax (inc personal allowance loss).
Even at £5,000,000 PA you only lose 51.79%.
Obviously you have to pay VAT & various other taxes, but as a total loss of income is not anywhere near 60% (unless you include VAT & other stealth taxes, which then bumps up everybody else's to similar levels due to these mostly being regressive taxes which hit the poorest hardest).
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http://www.thesalarycalculator.co.uk/
Type in £100,000. Then type in £100,001. See what the net change in income per annum is.
For a certain portion of income earned above £100,000 you pay a much higher -wait for it - marginal rate of taxation. How many times does this have to be explained?
http://en.wikipedia.org/wiki/Tax_rate#Marginal
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Soldato
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People are idiots.
It is fully understood (especially being an accountant myself
) but it is still using statistics to misrepresent the overall picture, when actually the avg paid on the full earnings is more more pertinent to the discussion than the tax rate on the specific income over £100 - £150k.Which tbh so what if the marginal rate is 61% at that level, the value of each £ over that level is less to the individual too.
It is fully understood (especially being an accountant myself
Which tbh so what if the marginal rate is 61% at that level, the value of each £ over that level is less to the individual too.
I don't dispute that and defer to your knowledge on the subject. Average and marginal rates of anything are completely different animals; my underlying point with regards to the 'so what' was that the incentive to earn above £100,000 takes a pasting, driving people to derive income from different sources to avoid the heavy tax hit. I would imagine you may well have aided and abetted in this at some point.
As to the value of the £1 to the individual, well that's speculation. People tend to live to their income, when they lose it they notice it. Maybe not when you're talking multiples of 100k, but I honestly don't think (and this is personal opinion, so get ready to flame!) that an annual income of a hundy large is a lot. It's a lot more than I earn, but it's not all that much.
What annoys me is people saying "No. Wrong" when they're disputing a totally different fact than the one being discussed.
I know what you mean, when dealing with large numbers all day then £100k doesn't seem a lot of money, especially when comparing it to the 'super-rich' - who are really just a handful though and not indicative for comparison - more comparable is when you look at the numbers who do earn that or more, which is around 1.5% of the population, then you realise it actually is one hell of a lot of money to the vast majority of people in this country.
I agree people live within their means, so any decrease in earnings is felt. The difference is if you lose 20% of your £150k earnings, you lose out on luxuries, if you lose 20% of your £15k earnings you are wondering how to keep a roof over your head and food on the table, so I would maintain the personal value of your 1st £ earnt is more valuable than your £150,000th
Lies, Damn Lies, Statistics....and Accountancy (My new favourite saying
)
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that depends in regard of contracting. the government seems to have a hard on for us at the moment
note: i have my own ltd. working for the government
Read what I quoted.
This.
Isn't the same statement as .
This.
I never said that they don't pay a higher marginal rate - just that it's nowhere near the 60% rubbish figure being tossed around earlier in the thread & that actual total deductions are pretty reasonable.
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that depends in regard of contracting. the government seems to have a hard on for us at the moment
note: i have my own ltd. working for the government
Aslong as you can't prove you are outside of IR35, which I can
KaHn
Not as bad as the tax rate for those who earn over £50k and get child benefits
Yes what’s this about, the only benefit my other half gets is Child benefit and now apparently I have to pay the government 55% of what she gets back to them, and there was I thinking I already pay enough tax.
Associate
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Tax credits are where you get, in effect, stupidly high marginal tax rates. They are withdrawn at a rate of 42p, so a basic rate taxpayer who receives tax credits has a marginal rate of 74% (42% lost tax credits, 12% NI, 20% income tax).
OK, so it is removal of benefits rather than taking earnings but the effect on extra salary is still the same - earn £1 more, only get 26p in your pocket.
We are entitled to these now because of high childcare costs (three kids in nursery = expensive). I think our pension contributions may be going up for a few years - £100 in a pension will only really cost us £38 after tax relief and tax credits increases...
OK, so it is removal of benefits rather than taking earnings but the effect on extra salary is still the same - earn £1 more, only get 26p in your pocket.
We are entitled to these now because of high childcare costs (three kids in nursery = expensive). I think our pension contributions may be going up for a few years - £100 in a pension will only really cost us £38 after tax relief and tax credits increases...
For incomes between £100,001 and £116,210 the marginal tax rate is 60%. It just is.
Total deduction are obviously less though, yes.
I'm aware of that (as at 100k you get 64k, & 116k you get 71k (the difference being 16k in wage, or 6k after tax which is the 60% you are referring to), but you have to read what I was responding to.
It was being implied the overall rate is higher than it is.
Also, when looking at 200/250k the same does not apply.
On 250k you take home 138k, on 300k you take home 162k.
The 50k difference in wage yields a difference in 24k after tax - (which is about 50%, not 60%).
Of as a better example, 10m yields 4.8m after tax, 20m yields 9.6m - which is again 50% - that logic only applies to that specific band & isn't representative of the wider picture)
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Both quotes say that every pound you earn over £100k up to £150k is taxed at 40% + the effective reduction in personal allowance of 20% = 60%. Which is the same as saying the marginal rate between those two income brackets is 60%. Which is true. I'm not really sure how you seem to be both agreeing with that at the same time as arguing they're wrong.
I was simply pointing out that looking at one small bracket in isolation isn't representative of the wider bracket.Both quotes say that every pound you earn over £100k up to £150k is taxed at 40% + the effective reduction in personal allowance of 20% = 60%. Which is the same as saying the marginal rate between those two income brackets is 60%. Which is true. I'm not really sure how you seem to be both agreeing with that at the same time as arguing they're wrong.
For each additional pound earned (once you get higher) it doesn't equal a 60% reduction (As I demonstrated with the other examples).
Aslong as you can't prove you are outside of IR35, which I can
KaHn
this depends on the point of view people have.
the taxman looks at something this way, where as other will see it differently. Just seems a lot of things going on at the moment where i work but i shall see what happens