60% income tax band under Tories!!! 60% income tax band under Tories!!!
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  1. #1

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    Default 60% income tax band under Tories!!!

    The number of high earners caught in a hidden 60 per cent "tax trap" is set to double by the end of the next tax year, projections show.

    The quirk means those earning £100,000 a year lose their tax-free personal allowance and face a marginal rate of 60 per cent on earnings between £100,000 and £123,000.

    It will affect at least 800,000 people this year, data from the Institute for Fiscal Studies shows, up from 588,000 in 2010-11.

    If the trend continues it is expected that a million people will be dragged into the tax band by the end of next tax year.

    This is due to wage inflation sending incomes above the tax threshold and the tax band widening in line with the ever expanding tax-free personal earnings allowance.

    Under the rules, announced in 2010, people's personal allowance reduces by £1 for every £2 that their adjusted net income rises above £100,000.

    As the Government has raised the personal allowance from £6,475 in 2010 to £11,500 today, the upper limit of the band in which 60 per cent tax is owed has risen from £112,950 to £123,000.

    People earning above £123,000 lose 100 per cent of their personal allowance. While the Conservative party has no specific plans to change the policy, Labour’s proposals would leave it in place, and through its plan to move the 45 per cent tax threshold down to £80,000, would increase the marginal income tax rate in the £100,000 to £123,000 band from 60 per cent to 67.5 per cent.

    Last night tax experts described the 60pc tax as "absurd" and "conveniently confusing" and warned that politicians had missed a trick by failing to address the problem in their election manifestos.


    Number of high earners caught in 60pc 'tax trap' set to double


  2. #2

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    Yes, well as long as it's "fair".
    “The period of the disintegration of the European Union has begun. And the first vessel to have departed is Britain”

  3. #3

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    So for those of us in the cheap seats:

    £100K = £11K @ 0% + £32K @ 20% + £57K @40% = £29.2K = ~29%
    £123K = 0@0% + £32K @20% + £91K@40% = £42.8K = ~35%
    £1m = 0@0% + £32K@20% + £118K@40% + £850K@45% = £436K = ~43%.

    So who pays 60% tax?
    Will work inside IR35. Or for food.

  4. #4

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    Quote Originally Posted by VectraMan View Post
    So for those of us in the cheap seats:

    £100K = £11K @ 0% + £32K @ 20% + £57K @40% = £29.2K = ~29%
    £123K = 0@0% + £32K @20% + £91K@40% = £42.8K = ~35%
    £1m = 0@0% + £32K@20% + £118K@40% + £850K@45% = £436K = ~43%.

    So who pays 60% tax?
    If your numbers are right. I can't be bothered to check them, since there's at least one error in there on the very first line.

    How much tax do you pay on the incremental income between £100K and £123K? £13.6K. So for every pound of income above £100K up to £123K, as ATW rightly notes, you lose 60p in tax.

    And Labour is even worse.

    And ATW's beloved LibDums, with the tax increase in their manifesto, are also worse than the Tories he hates (though they aren't as bad as Corbyn's Cronies, I'll give them that). For them, it's 61.5% for people in that income range.

    The tax on child benefit has a similar effect for some people. It varies depending on how many children they have. What a stupid way to run a tax system.

  5. #5

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    Quote Originally Posted by shaunbhoy View Post
    Yes, well as long as it's "fair".
    It's all theoretical for you at that level.
    Hard Brexit now!
    #prayfornodeal

  6. #6

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    Quote Originally Posted by WordIsBond View Post
    What a stupid way to run a tax system.
    This. It's not the EU that's to blame for our fooked tax system.
    But they need to keep the system complex so that educated Remainers in the SE can be bled white to pay for whining uncompetitive Brexiters in Devon, Wales and the North.
    Hard Brexit now!
    #prayfornodeal

  7. #7

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    No NI in those calcs.

  8. #8

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    Under Corbyn no-one will pay 60% tax except Government officials. Everyone else will have left.

  9. #9

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    Quote Originally Posted by VectraMan View Post
    So who pays 60% tax?
    Er...

    marginal income tax rate

  10. #10

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    Quote Originally Posted by WordIsBond View Post
    And ATW's beloved LibDums, with the tax increase in their manifesto
    1% income tax increase for ALL bands, now that's fair - transparent, honest.

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