I have not heard any of the parties mention this. A 100k earned by a single earner takes home far less than 2 people earning 50k each. I doubt any of the parties are planning on scrapping it?

Oh, please don’t comment that those earning 100k / year should be hammered for tax. This post is not about that 🙂

A 100k earned by a single earner takes home far less than 2 people earning 50k each

£50k earned by a single earner takes home far less than £100k earned by a single earner.

The comparison is irrelevant

Not heard about it but the Tories would be the ones who would when they’re finished wooing the super rich. Hopefully no one does.

None of them are openly pandering to the top 1% of earners

Give a shared tax allowance to couples and you need to give it to everyone. The overall revenue calcs probably say don’t do it as you then start removing potentially a lot of people from higher rate tax.

Have to settle for raising the inheritance tax threshold.

have to settle for another Public Sector kicking

£50k earned by a single earner takes home far less than £100k earned by a single earner.

Need to work harder and/or be luckier then.

No, but it is already conservative party policy to allow earners below the tax threshold to transfer their personal allowance to spouses.

There also isn’t a 60% tax rate or a 100-120k tax band…

There is a lot of logic in taxing household income not individual earners built would require such a massive overall of the tax system it is unlikely to happen. That needn’t be about reducing tax for the wealthy but rather about fairer tax…

anagallis_arvensis – Member
Have to settle for raising the inheritance tax threshold.

And with luck they will abolish the whole immoral thing.

Are any of the political parties planning to scrap the 60% tax rate at 100-120k?

Am really hoping this is theoretical thing rather than a personal thing, because it would be really depressing if someone earning north of £100K was not savvy enough to know what tax band they were in!

There is no 60% tax band to scrap you doughnut! There is a 40% high rate tax band and a 45% additional tax band for folk over £150K. That’s it.

There is no 60% tax band to scrap you doughnut! There is a 40% high rate tax band and a 45% additional tax band for folk over £150K. That’s it.

That’s a little like berating someone for talking about Road Tax rather than VED rather than the point being raised.

Can’t see it going though – it Tories were going to do it they’d have done it same time as the 45% rate and Labour brought it in so unlikely to delete it.

Because the individual’s tax free allowance is removed (above £100k?), the income between £100k and (£100k+2xpersonal allowance) is effectively taxed at 60%.
In my opinion, it’s totally illogical.
What’s the chance of it changing (‘giving tax breaks to millionaires’, etc., etc) – I’d say very little.

Higher taxes are just a greater contribution to society – enjoy it and feel smug 🙂

Between 100- 120 k for every £2 they earn they loose £1 of tax allowance hence the marginal rate of tax between those two points is higher
I assume this is what the OP is referring to.

ah 55 seconds to slow

… 60% tax rate at 100-120k?

😯

That’s crazy income tax rate.

No wonder this country is slowly doomed because the govt is not thinking with their heads.

You still vote for the big parties? You might as well hang yourself now.

At some point people will try to evade tax which I think make sense if they can and I don’t blame them. Moral? Ya right … look into the mirror.

The govt is simply a parasite now. 😡

As Trek says, there is a completely illogical 60% band between 100k and £120k. It then drops back to 40% before going up to 45%. It’s neither progressive, nor regressive, it’s just bonkers.

Worse still, because it’s implemented by mucking around with your personal allowance, it breaks PAYE.

And whilst £100k is undoubtedly still a very high salary, the threshold hasn’t been inflation adjusted since it was introduced, so it’s considerably lower than it was in real terms, and it will continue to erode in real terms, affecting more and more people.

EDIT – there’s a handy graph of marginal rates in this article: http://www.bbc.co.uk/news/business-11733896

It’s a perfect example of what’s broken in our political system: they sound bite idea of “high earners” still getting a “tax free” personal allowance completely overrides any sort of common sense or logical approach to tax rates.

Am really hoping this is theoretical thing rather than a personal thing, because it would be really depressing if someone earning north of £100K was not savvy enough to know what tax band they were in!

There is no 60% tax band to scrap you doughnut! There is a 40% high rate tax band and a 45% additional tax band for folk over £150K. That’s it. I think you are the doughnut here!

Maybe have a read up on what happens to your personal allowance when you go over 100k

Egg on face?

Oh, let’s not forget NI…make that 62%.

So the overall tax rate on £100,000 is 34.8%
http://www.incometaxcalculator.org.uk/?yr=2015&age=0&time=1&ingr=100000#
on 50k (x2) it’s 27.7%
The overall income difference is the couple would be about 7k take home (or £580/month) so hardly the biggest injustice in the world.

Egg on face?

That post was as clear as yours so they have as much as you do

There is no 60% tax band to scrap you doughnut! There is a 40% high rate tax band and a 45% additional tax band for folk over £150K. That’s it.

This is indeed true and you could have explained yourself in your OP and not claimed there is a 60% tax rate when there is not a 60% tax rate

Nobody said it was the biggest injustice in thee world.
But it’s illogical, unfair and , in my opinion, should be changed.

But it’s illogical, unfair and , in my opinion, should be changed.

How much would it cost to change? How many people?
As I said earlier do it for the 100k and you need to do it for everyone and reset the entire tax system. For every winner there will be a loser.

Mikewsmith, you don’t need to do ‘it’ for everyone, because it’s only those earning in that bracket that are affected.
If I was King, I’d stop the removal of the personal allowance and tweak the higher rates to recover the loss.

you don’t need to do ‘it’ for everyone, because it’s only those earning in that bracket that are affected.

So a household should pay the lowest tax rate for the household? Great idea but some people will pay more, some will have a big adjustment. How much will it cost to administer the new system, what will the overall impact on treasury collections? What will be the overall difference on the revenue collected.

Mikewsmith, i can’t believe it would be expensive to administer, we seemed to manage before it was changed (2010).
I don’t know how much it raises, but it could be recovered by raising the higher rate. I think that would be more logical and fairer.

I guess you are in the band that hurts then…
One of the reasons for not doing combined child benefit calcs was the admin costs were higher than savings. How do you know the change didn’t net the treasury more cash for the work put in.

Also just spied your 62% post above, stick to your overall rate…
How much extra do you save on pension contributions? Put the right amount in and you could probably come out square.

We’d be better off with a system where tax was simple with incremetal increases in rate by reference to earnings. Any attempt to negate benefits for the rich from changes intended to benefit the poor is invariably going to be relatively expensive to administer.

Tax changes which are politically motivated solely to win votes or as a superficial sticking plaster in the eyes of those who don’t see the detail are invariably inadequately costed, planned and resourced.

I’d favour few changes in the short term in preference to a larger scale rethink of our tax system to be implemented in say 2020 AND properly funded. That last bit is key. Short termism is always hugely more expensive in the long run so it’s about time policy makers ‘manned up’ as the Govt of the day to it right rather than shoddily which always leaves the next Govt with a partially implemented rag bag of rules and supporting systems to further tinker with and so on.

I genuinely worry that our public services will be slowly eroded under the banner of austerity and by setting the public against the public sector until finally the systems break and the public go ‘WTF?’. By which time it WILL be too late but those who made the decisions and chose those directions of travel will have long since finished sunning themselves on foreign shores paid for with money which ought to have better spent for the good of future generations. Hell in a hand cart? Maybe not but the gap between the haves and have nots is expanding ever quicker and that is not a good thing.

Hard to imagine that scrapping it wouldn’t save admin cost. Having your personal allowance dependent on how much you earn adds considerable complexity to the system, and makes it almost impossible for the PAYE system to take the right amount of tax at source.

If you want the extra tax take, then lower the £150k threshold so that more people pay 45%, rather than having a marginal rate that goes up then down then up.

For me the issue is one of fairness. According to HMRC the tax rates in the UK are

£10,600 to £31,785 20% Tax
£31,786 to £150,000 40% Tax
Over £150,000 45% Tax

In all reality it should read as follows

£10,600 to £31,785 20% Tax
£31,786 to £100,000 40% Tax
£100,000 to £121,200 60% Tax
£121,200 to £150,000 40% Tax
Over £150,000 45% Tax

Everyone should be entitled to a tax free personal allowance, regardless of how much they earn. People moan that the rich should pay more, but given the top 1% of tax payers already contribute ~30% of all income tax paid to the treasury, I think they already pay their fair share

Deepreddave, fully agree, but you’re dealing with politicians.
What chance sensible, long term decisions?

So the overall tax rate on £100,000 is 34.8%
http://www.incometaxcalculator.org.uk/?yr=2015&age=0&time=1&ingr=100000#
on 50k (x2) it’s 27.7%
The overall income difference is the couple would be about 7k take home (or £580/month) so hardly the biggest injustice in the world.

The interesting comparison would be £120,000 vs 2 x £60,000, but the calculator you link to appears to be broken as it doesn’t remove your personal allowance above £100k. I think the difference comes out at about £11.3k if you do the sums right.

@flanagaj whats the overall rates for those earnings?

If you can find a better calc then share it, but for all this the overall % tax paid is a better calc. Also adding in what you get back on pension needs to be taken into account.

I’m all for fair, but the HMRC needs to also collect effectively.

I think the figures are 39.3% for £120k vs 30% for 2 x £60k, based on http://www.moneysavingexpert.com/tax-calculator/

And with luck they will abolish the whole immoral thing.

But economics advisors/experts insist morality has nothing to do with public finances and the tax take. Or is that only for those avoiding tax?

For another example of why the current system is stupid, look at child care vouchers. A few years ago, it was decided that it was unfair that higher earners “saved” more money on child care vouchers, so they introduced limits on the total value of vouchers that people in the 40% and 45% bands could get so that everyone saved exactly the same amount overall. Of course, they forgot about the 60% band, because it’s not implemented as a proper income tax rate, so people in that band can actually save more than everyone else.

The more you introduce politically motivated complexity into the system, the more you create stupid little loopholes.

We can argue about whether should pay more or less tax, but let’s at least implement it in a sane and logical manner.

flanagaj – Member

Everyone should be entitled to a tax free personal allowance, regardless of how much they earn.

Why? The point of the tax free allowance is to give a little move some tax burden off the people that can least afford it. Frankly it’s done it’s job long before you’re earning £100000. The only question then is about how you fairly phase it out, and how you avoid arbitrary steps in taxation- it does phase out pretty fast in the £100-£120k bracket just now, IMO the fix is to start phasing it out much earlier.

flanagaj – Member

given the top 1% of tax payers already contribute ~30% of all income tax paid to the treasury, I think they already pay their fair share

We talked about this in another thread recently but the top 1% actually pay a disproportionately small amount of tax compared to lower earners, when you take into account the income differences. Saying “the top 1% pays 30%” sounds impressive but doesn’t take into account actual earnings. Or of course affordability

The national proportion of tax that the top 1% pays is higher than in the 80s, but the proportion of their income that they pay is pretty much the same- we’re supposed to feel grateful that they pay 30% of tax earnings, I think, and forget that it’s only gone up because they are richer.

TrekEX8 – none whilst we have political parties linked to funding/unions/big business etc rather than utterly independent with the country best interests solely at heart but then that goes to the nub of real politics I suppose.

I just hate watching short term thinking costing our country tens of million ‘today’ but ‘hundreds of millions’ tomorrow (not literal timescales). Those with plenty can afford to pay more and wouldn’t haven’t more without those below them in terms of wealth. I know I’d not lose sleep over paying 50% on earnings > £250k compared to someone earning < £25k paying 10%. The playing field is suitably levelled and more by the wealthier being more able to pay for guidance on how to organise their finances to pay less than generally intended. There are plenty of minor tax planning practices which don’t reach the dizzy heights of avoidance bordering on evasion.

We need a Govt with a Conservative brain and a Socialist heart maintaining good EU trading and solid border controls but allowing positive/healthy immigration levels.

My first rule as Lord of the Realm would be that all politicians must answer any question with a straight yes or no. Starting any answer with the word ‘Listen….’ would lead to £1000 fine!

The Green Party would do the opposite.

Why? The point of the tax free allowance is to give a little move some tax burden off the people that can least afford it. Frankly it’s done it’s job long before you’re earning £100000.

Agreed, but…

The only question then is about how you fairly phase it out, and how you avoid arbitrary steps in taxation- it does phase out pretty fast in the £100-£120k bracket just now, IMO the fix is to start phasing it out much earlier.

The point is that you don’t need to phase it out. You can achieve the same effect with higher marginal rates further up the ladder without removing the 0% band at the bottom.

It’s the desire to get crowd pleasing soundbites like “we’re removing the “tax free” allowance from higher earners” that results in a mess like this: what matters is the total tax due on a given level of earnings.