This is true, I even had a lecturer tell the whole lecture theater this at University. They get fined for every space that isn't filled, hence why they hand out unconditional offers like they're smarties.
Tax - Wheres the incentive to earn more
- Thread starter ProStreet
- Start date
This is true, I even had a lecturer tell the whole lecture theater this at University. They get fined for every space that isn't filled, hence why they hand out unconditional offers like they're smarties.
You're a CA but don't understand interest rates or taxation? Pull the other one.CA.
Lol. I underestimated the balance on my student loan.
How do I not understand taxation? I just don't agree with the rates.
Soldato
Work in a high-paying industry such as Cyber Sec, Identity etc. I think most of the fresh grads at our place earn £60k+ OTE
Associate
- Joined
- 4 Jun 2020
- Posts
- 2,401
Ok on this note, some employers offer something similar to the share purchase thing where you can simply reduce your salary to go into a savings account with the employer.
Money saved this way reduces your taxable income, but not many employers do it and I can't remember what its called.
Money saved this way reduces your taxable income, but not many employers do it and I can't remember what its called.
Unless you are thinking of a pension, there is absolutely nothing that fits this category.
Soldato
I wish there was
you can sometimes get lucky in shares though. If they issue them at a low share price, you only pay capital gains which is less on the gains…
I'm not sure asking a random person their specific career is going to be too illuminating, there are multiple careers that can pay over that amount, the vast majority of them don't require an MSc either - though some MSc degree can certainly open the door to some very high paying and/or interesting careers. Applied maths, stats, ml etc.. are pretty versatile in terms of industries where they're useful - from finance to oil exploration to big tech companies to small start-ups etc.. all of which can pay the sort of sum you're querying or indeed much more too.
You can become an accountant or an actuary without a degree too for example - in the latter case they typically hire maths graduates, in the former, they'll take anyone and some of the big firms have been quite open about this - non-grad routes, or disregarding which university you went to etc..
A mate of mine from uni went to do the grad scheme thing at a big 4 firm, I think for him it was just the done thing... go to decent enough uni, get 2:1, join a big firm etc.. he hated it, found it dull. apparently, a whole bunch of them drop out, plenty of people fail the exams or just decide it isn't for them. (conversely, some really keen people who missed out on a place at one of these firms might self-study for relevant exams anyway - like ACCA or actuarial exams etc..)
Salespeople can easily earn that amount (and much more) - I don't just mean the obvious stuff like estate agents and car salesmen (though it's certainly possible there and no degree required) but sales teams in big companies - selling enterprise software for example, that can be a year-long team effort involving say a salesperson + some pre-sales people and sometimes calling in others like product managers - can end up spending tens or even hundreds of thousands just pitching (if you include the flights, hotels, daily cost of people taken away from other projects) and if these are big deals then the comp can be very very good!
Yes, sort of. Share options granted as part of your overall comp/income for example could otherwise attract tax and NI when exercised but not if they're granted as part of an HMRC approved scheme.
But basically, one way of implementing a share scheme (which is what you're probably thinking of) does involve a savings account which you save into for a few years and an option to purchase shares at a fixed price at the end of that term, it is quite limited though - there is a max amount you're allowed to save each month (and these contributions you make to the savings are net of tax) however it's the option itself that is a freeby as it doesn't attract any income tax or NI when exercised* (but there is a limit under this sort of scheme to how much of a discount the strike price can be relative to the underlying price at the time) + on top of that any interest gained in the account is yours free of income tax too (which is a bit moot at the moment as interest rates are ridiculously low).
If the price barely moves then you still get to purchase a bunch of shares at whatever discount the strike price as set at at the start, if the price rises then you've got your built-in discount and possibly an even bigger gain from the current price alternatively if the price drops below the discount then just don't exercise the option and take your money out of the savings account instead.
You're still liable for GCT unless you transfer to an ISA or pension.
*that's the way HMRC taxes these things if not included in an approved scheme which IMO is guff, income tax and NI, where it applies, IMO should be applied to the option's premium (or what it would be in theory) when it is granted as that is the value of the thing you "earned" as part of your comp at that point in time... I don't know if it is just accountants/HMRC types just being general biffs when it comes to anything they deem to be too complicated or if it is some worries that some people won't understand being taxed on something that might turn out to be worthless later on.
Last edited:
Associate
- Joined
- 4 Jun 2020
- Posts
- 2,401
Incorrect:
https://www.gov.uk/tax-employee-share-schemes/save-as-you-earn-saye
tax advantages are:
- the interest and any bonus at the end of the scheme is tax-free
- you do not pay Income Tax or National Insurance on the difference between what you pay for the shares and what they’re worth
https://www.gov.uk/tax-employee-share-schemes/share-incentive-plans-sips
If you get shares through a Share Incentive Plan (SIP) and keep them in the plan for 5 years you will not pay Income Tax or National Insurance on their value.
Its limited to just £3600 a year though.
Most employers only offer one of the schemes on the list.
Company share option plan is up to £30,000, but only the difference between what you pay and the share value is tax free.
If putting money into a pension reduces taxable income, then just do that.
Last edited:
Does the OP get how the tax systems works.
If your earnings go above the higher tax pay bracket, that "part" of the earnings is taxed more, but not your entire salary, meaning you still have more in your pocket with a higher salary.
There seems to be a mindset embedded in British people that they must not pay tax, as if its the root of all evil or something.
Whenever in a face to face conversation someone moans, its very swift and easy to make them go quiet.
I simply ask would you rather be earning 100k paying 40% tax or 20k paying 20%.
If your earnings go above the higher tax pay bracket, that "part" of the earnings is taxed more, but not your entire salary, meaning you still have more in your pocket with a higher salary.
There seems to be a mindset embedded in British people that they must not pay tax, as if its the root of all evil or something.
Whenever in a face to face conversation someone moans, its very swift and easy to make them go quiet.
I simply ask would you rather be earning 100k paying 40% tax or 20k paying 20%.
Soldato
Robbing PAYE middle earners blind, had to repay £7k child benefit last year, plus £1.7k odd each year going forwards. Taxed to the hills @ 40%. What makes it worse is my wife doesn't work as she's looking after the children, so we have her £12k odd tax-free allowance and £30k odd @ 20% doing nothing for us. Effectively we're about £5k a year worse-off a year vs a family who earn the same salary between two parents.
I genuinely question myself becoming a trade boy, do less hours with more chances to get creative with income... Most tradespeople I know are loaded with wads of cash in their back pocket, i wonder why...
I genuinely question myself becoming a trade boy, do less hours with more chances to get creative with income... Most tradespeople I know are loaded with wads of cash in their back pocket, i wonder why...
I'd politely suggest that perhaps accountants and HMRC understand these things rather more than you give them credit for. I'd also politely suggest that you may not understand the bigger picture, particularly given your suggestion would lead to some hilariously simple tax avoidance.
Soldato
- Joined
- 31 May 2009
- Posts
- 21,257
I'm a graduate on the plan 2 student loan, im about 5 years into employment and earning a 'high' salary relative to most (c£70k). However any additional income I now earn is taxed at >50% despite only being in the 40% tax bracket. This is due to the student loan which is effectively an additional tax.
Even though I pay around £4k pa. on my student loan, due to the interest rate of RPI plus 3%, I'm not paying anything against the capital, only interest.
For example, I got my bonus of £6900 this month and my take home from that bonus was £3400.
Where is the incentive to earn more? Why is the government charging ludicrous rates of interest. Only the extremely high earners can afford to pay it off early, whereas the lower income don't pay anything at all, and like most of the time, the middle income earners pay the most of it.
I understand if people feel like I'm being selfish when im on a decent income, it just feels so demotivating to try to work harder when you get less than half of it in return.
Anyhow
Really?
Would you rather not have the £3400?
You could simply earn 7k less, and have 3.4K less.
This is how the real tax world works.
So what is the point?
Someone moaning about earning enough to be in a higher tax paying bracket, do you realise how many people in this country would love to be in that position?
You cant be that badly off if £3400 isnt an incentive to you.
High interest rate on student loan resulting in me paying more tax for a longer period than if the rate was reasonable, such as it was under plan 1. That's all.