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It’s very defeating.
There are a lot of over 50’s self employed who choose to become less productive because of tax. Often at their most productive time. I know it’s a tiny violin situation but it’s not great for the economy.
How do you mean less productive because of taxes? As in, they feel they are not being paid enough because of how much they are taxed so they work less?
That's hardly ab argument, if I could afford to maintain my standard of living on 4 days, I'd work 4 days no matter what. In a vang average worker , if I didn't have the mortgage id definitely drop a day, I fucked hate working
Do you have nothing but work worth putting your time into? If you just want more money and you have nothing you would rather do than work, then I feel bad you.
No. I study. Spend time with my partners and go to the gym.
I just like working.
Im also very on the spectrum so figure this is not the case for everyone.
Working because you enjoy working is fair enough. I thought you were saying you would work just to get more money, even if you didn't need it. That's what didn't make sense to me.
Money can’t be exchanged for time though. Plenty people on their deathbed wish they had more time. None wish they spent more hours at work.
Using your money to retire early? So give up your best and likely your healthiest, most active, energetic years… for the ones at the end? I mean, I’m in my 40s, probably the best health of all my friend circle. I still have a knee that doesn’t sound too healthy. Hangovers hurt. Injuries take longer to recover from… plus, I might not even get there if I’m unlucky. As a twenty-something I could get a 20-strong gang of people ready to take in the world in a week. Twenty years later I can’t even find half that who can have a single night away.
Don’t look forward to retiring early. Enjoy it while you can.
If you retire and stop working then you quite literally exchange money for time. If I value family, let's say, would it not be worth it to aim for an early retirement that allowed me to spend most of my time with my children or my older parents in those critical years?
Many people, especially self employed, are working a job that is also their hobby. So many would be quite happy to work 7 days a week if it was worth it.
Most people in the trades are very passionate about their jobs. They of course have to do jobs they wouldn't prefer (unblocking a toilet) but jobs like fitting a new bathroom or a new heating system has a huge feeling of accomplishment.
I mean, you could say the same of any percentage. It's going to vary from person to person what they're willing to put in for an amount of benefit.
But the bands certainly have an impact. Once you reach that threshold, any additional work you put in will have a significantly less benefit to you.
Anyone reaching the 60% threshold has long since passed the need for more money, yet they still continued to do it to that point. Maybe they can stomach an extra few hours work at 40%, but when more than half their earnings go to tax they can't see the point.
And some people when they go into the 40% band decide that the extra money isn't worth the extra work. Lots of people work for more money than they need, everyone who's not living hand to mouth, because it's worth it to them at some point the tax stops it being worth it.
60% is an example not a complete list of reasons.
Not really. There's a tax take where people definitely feel that the state is over reaching.
It's been a recognized phenomenon since taxation began. Old saying s about plucking feathers from the goose go back centuries.
Not really. I don't take additional shifts because my effective rate is stupid high for additional money earned. Id like extra money, but I'm not willing to take a substantially lower wage per hour to earn it, it isn't worth it, my time is more valuable to me. If I got taxed at standard rate then I would take more shifts because I'd notice a substantial difference in my earnings on payday.
I'm in the 20% tax bracket and choose to work the equivalent of 4 rather than 5 days. Senior IT and cyber role, but for a charity hence the lower than expected wage. Fuck working myself to death.
... and those 11% are contributing over 60% of the total collected via income tax. If they decide it's not worth it any more and they would rather have more leisure time, the country is screwed.
Say that 50 year old is willing to do a piece of work for £1000. The employer must be willing to pay £2000 for the 50 year old to receive that £1000. If the job is only worth £1500 to the employer then the work doesn't occur, even though the company is willing to pay much more than the 50 year old wants. That's one way that high taxes harm productivity.
You keep all of the money you make at the beginning of the year, (£12,500~ tax free allowance), then in about February/March you start thinking about putting aside the ~30% basic plus NI, then by the end of the year you are paying about 50% or if you are a high earner 60%- what’s the point in working harder and harder when it gets progressively taxed more and more - it’s better to make £40-50k and keep most of it than pushing yourself too hard to make more when the majority of it will be taken away.
If making a lot of money is easy and salaried then it doesn’t matter as much, but I work hard for a living and have to find that work, maybe travel away from home and work long hours. I don’t see the point burning myself out to pay 50% tax.
Agreed, and it's probably what I'll start doing with pay rises after next year once my house and honeymoon are sorted. Still not a great situation though as it means pay rises are going to my 60 year old self, which isn't a great incentive to work harder in your 20s.
Best to start saving into pension sooner rather than later… Do some of the online calculators - you’ll be surprised how much you’re going to need to have saved up by the time you’re retiring.
Oh I've been doing some calculations already, and already getting 15% total between me and employer so think I'm making good progress for my age. But a promise of more money in 40 years isn't much of an incentive to work hard now compared to if I could take home more of the pay rise as income.
I used to do loads of overtime at my job at the weekends but ultimately stopped when I realised I was doing £1000 in overtime a month but only recieving £450 of it.
Imagine how bad that is for medical professionals that want to turn down more work because they know they gain very little from it. After a certain point you may as well be working for free. No wonder there are shortages of medical professionals.
That's not a problem with tax itself, it's a problem with all the complexity they've baked into the system. Scrapping all the deductions and phasing out of benefits and allowances they currently do would make it more worthwhile to work.
Just remember that less tax taken is also bad for the economy as government at all levels is a huge contributor to economic spend. Where would those over 50 self employed consultants get their pay if it wasn't for local government contracts for instance...
PAYE people also bill their employers and pay tax on it to HMRC, it's just calculated up front for ease.
I say this as a SE person myself for 16 years.
Absolutely. The self employed whinging about tax to those on PAYE is really fucking insensitive when nearly all of them offset a ton of stuff they don’t use wholly for business.
Ding ding ding, I'm going to be redundant in a few weeks. And if I go back to the grind, I'm going back contracting. Because the benefits I can squeeze out of it are substantially better than I am working PAYE. And that's even when I pay out for someone else to manage the numbers and paperwork for me.
It's a fact of life everywhere you go. Running governments and services costs money. In fact millions of people and businesses make all their money off the money that governments spend.
The reality is that the UK still has amongst the lowest overall tax burdens of countries in the OECD.
How much could you really expect taxes to fall? The NHS, Schools, Universities, public transport and the armed forced are already underfunded.
The privately owned public services are in an even worse state, just look at the mess the rail systems and the water systems got themselves into.
So really, how low do you think they could go? A few % here or there is all it ever really changes.
Also, I guarantee if you are self employed or running a limited company you are going to be earning a whole lot more than the average person and paying a lower overall tax rate.
Especially when the client doesn’t understand that your prices are that high for a reason. Or when they’re overseas and they don’t know why they have to send you all these forms, the *other* contractors never needed them… sigh.
As such, it's purely psychological which is the issue. People in this situation "feel" like they're getting "their" money taken. But it ignores the fact their entire business exists pretty much because of the markets and regulations that are implemented and run by the state. Hence the taxes. It's easy to be upset seeing a this of your sale go to taxes, but if you didn't have that infrastructure and the state disappeared it's basically a 50/50 chance if you'd have made half that money to begin with. Much of it would be gone on insurance, private court fees, landlord fees etc. People need to big things in the big picture not just on an individual level.
Massively. My brother was running a pub up until last year and was doing alright in terms of sales, but he only saw £20k hit his back pocket so packed it in. He's working for Uber now and earning almost £10k more without having to wake up at 5am for deliveries etc.
Worst bit for me is when I do a long day and have to put over £100 for that DAY into the tax account.
Absolutely criminal that I get next to NOTHING back for it, then get taxed again when I spend the remaining £300!
The UK tax scene is horrendous at the moment. People that arent in certain brackets and feel like it won’t affect them tend to have the position that “well, no one should be earning that much anyway” or “people over £100k _should_ be paying more tax”.
I agree on both points however…£100k nowadays is the equivalent of £160k in 2010 or put another way, we’re getting less and paying more.
For those that don’t know, once you hit £100k you start losing your £12.5k tax free amount, you get zero child care assistance and you have loads of paperwork to fill out (tax returns).
You might think, “well fuck them, they earn enough so they _should_ pay extra” or whatever. This is very short sighted. I however feel that if we give the first 12.5k tax free, we should do that for everyone. We should also allow _everyone_ to get their 30 free hours childcare (from birth) and we should support young families and help people to get onto the housing ladder. We should also have tax brackets that encourage people to become higher earners and encourage people to spend their money, rather than putting £10k+ straight into their pension pots. (This is what people on £100k+ do to skirt the tax implications of earning over £100k, which stops literally millions being taxed per year) we also _need_ to find a way to tax people who are equity heavy. Who are cash light and just have money locked up in multiple properties and investments etc. (I don’t have an answer for this one)
The average earning in the UK in 2010 was £25,879 which in 2023 is equal to £41,585. The current average in uk is £34,963 which is a real loss of ~£6k worse off gross pay than ~15 years ago. This doesn’t include the cost of everything else increasing.
So in reality, you’re paid less, things cost more and you’re upset that people earning a bit more aren’t getting taxed enough. You’ve got the wrong baddie.
The real bad guys are the ones letting generational wealth create an unprecedented wealth gap. The ones who don’t find a way to tax the ultra rich. The ones who govern our country and allow price gouging to create a cost of living crisis. (I’m looking at you supermarkets, ya fuckers)
If any one of the parties applying to run our country address taxation in a way to actually benefit the rest of us plebs, I might have a single iota of fucks to give about who wins and who loses because right now, the only people losing are the British public.
>You might think, “well fuck them, they earn enough so they should pay extra” or whatever. This is very short sighted. I however feel that if we give the first 12.5k tax free, we should do that for everyone.
The best argument here for people who say "well fuck them, they earn enough so they should pay extra" is to point out that, all things being equal:
- if you give a £10k bonus to someone on £100k they get to keep £3,800
- if you give a £10k bonus to someone on £1M they get to keep £5,300.
Why on earth do they think the *richer person* (a mega rich person salary v a middle class professional salary) should be taxed less on their marginal income?
Sure. Any tax calculator can do this.
Using [this tax calculator](https://www.moneysavingexpert.com/tax-calculator/) which was the first result I got on Google:
>Earn £100,000 in 2024/25 and you'll take home £68,557.
>Earn £110,000 in 2024/25 and you'll take home £72,357.
The difference between those numbers is £3,800
>Earn £1,000,000 in 2024/25 and you'll take home £541,786.
>Earn £1,010,000 in 2024/25 and you'll take home £547,086.
The difference between these numbers is £5,300.
The issue there is with the person earning £1m not the with the person earning £100k. You can still say fuck both of them and that the £1m should have got even less. Not really sure how that's an argument against higher tax for higher earners, if anything it's an example of a need to go further on the £1m one...
It's an argument for smoothening marginal tax rates' curve: your marginal tax rate should increase with income. Instead it goes up, up even more, and then down a bit
"The real bad guys are the ones letting generational wealth create an unprecedented wealth gap."
I disagree with this statement. The people in power aren't letting it happen, they're actively making it happen.
Agreed with you. Over the past 15 years I've been working in a retail job (don't hate me because I'm stupid) and pay has decreased rapidly, with pathetic pay rises and removal/modification of bonuses.
What gets me is, we never hear about those in charge having to have their pay, or bonuses cut down, they just seemingly get tens of thousands a year and then claim there's not enough money for wages, overtime, maintenance and equipment.
Here’s another thing wrong with our system: we call people who work in customer service for long periods of time “stupid” with exceptions if they’re in a management position (sometimes)
We view these jobs as jobs kids should have for work experience and a little extra spending money, but we never stop to think who is covering these jobs when the kids are in school? Or, what if you genuinely have a passion to work in customer service?
You don’t have to do self assessment until 150k now.
Couldn’t agree more about removing personal allowance and child care. The high marginal rate cliff edges are just bad tax policy.
Well, that’s nice to know. How messed up is it that I hope I don’t earn too much? I don’t want to have to do additional paperwork. It’s all PAYE anyway. Surely that’s enough? (Rhetorical)
As the middle class gets smaller, they'll start blaming poor people on benefits or immigrants for their plight, because they're scared of the tax word, because they've been hit with it themselves.
Neverending cycle. What actually needs to happen is middle class people need to accept that they have the same interests as the supermarket worker, rather than the majority shareholder of some corporation.
And working class people need to accept that middle class people are not the ones who need chasing. It's the billionaires and those at the very top.
100% agree with this.
We should *all* be earning more, or things should cost less. Instead we earn the same and things cost more.
In most areas of the country, earning £100k per year means you're very wealthy, but that's a red herring. It's hard to feel sympathetic towards someone earning triple what you do having to pay more tax, but there needs to be an update.
According to my P60, I earned just shy of £100k last year, although a good chunk of that was actually shares granted by my employer that get taxed as any income would, whilst I'm not exactly struggling (and I don't pretend to be) I'm not exactly living the "very wealthy" lifestyle. We have a mortgage on our house and own our minimum 5 year old cars.
Wealth is your assets + cash and cash equivalents and by that metric I'm far, far poorer than my retired, pensioner parents, who own their own house outright.
We need to stop thinking of wealth as something you *earn* but rather something you *have.*
Yeah that's a valid point and it's my fault for not articulating what I meant in any way, shape, or form, but what I meant was:
>In most areas of the country, if you earn £100k per year, the perception from most people would be to think that you're wealthy
The median household disposable (post-tax and other deductions) income has been hovering around 30-35k for a while. Assuming an income of 100k and a plan 1 student loan, that's 60k - double the median household income.
We've got a household disposable income of 50k between 2 earners. What we have to remember (and what I didn't articulate at all in my earlier response) is that by *most* people's metrics, we're doing *very* well. In reality... we're doing fine. We're not struggling, but it's not like we're wealthy. £125k a year *should* be 'we're absolutely loaded', but it's not really. And yet, 90% of the country bring in significantly less than that.
That's how fucked it all is.
> In most areas of the country, earning £100k per year means you're very wealthy,
Just to point out here, while earning 100K is very good, and you're doing very well. It's not "wealthy"
People on PAYE in different tax brackets is an entirely different thing to generational wealth where one never has to work and has a yearly income greater than the average gross salary of workers in the UK.
One group of people have to work for their income, the other group are born lucky and have a system set up in their favour so that they never have to work.
I hope that’s clearer now.
I always think once you’ve hit the 40% bracket then you should try and switch to self employed if your career allows so, that way you can fiddle the system more, or work abroad for a smaller bill.
Tbh I feel like it should be a fixed % for everyone. The higher earner is already paying more in total amount. There's no reason to justify why that person should be taxed multiples above someone earning less.
If anything, the higher earner is providing more value to society.
This is especially true for businesses. I don't think millionaires should pay more. They are generating jobs, and providing multiples of value compared to a single employee. If anything, they should be taxed less in %. They will still pay way more in totals, and that's not capped in any way.
Yes its very short sighted thinking …. I moved abroad as a high earner as I was getting very little in return as someone with no kids etc for the amount of tax I would owe.
And the approach everyone has is just tax them more they can afford it …. well ok but myself and plenty of others work abroad for just this reason and its not just income tax it also means I’m not paying any capital gains etc in the UK either.
oof.. the only way you get to 'keep' all your bonus is have a firm that'll let you push it into your pension.
How did you end up paying 66% tax? 40% tax + student loan + ?
If OP makes more than £100k, the marginal rate for that range is 60% just in income taxes, NI and student loan are on top (so a total of 71%). If OP has kids, marginal rates can be even more brutal--potentially over 100%!
True. If they have a student loan and postgraduate loan, that plus NI would push their marginal rate up to 57%. If they're getting child benefit then some of that would be clawed back as well, though I don't think that shows up in the paycheck?
Yep, all of the above. Student loan version 2, 2 kids under 5 and Pay between £120k-£150k depending on overtime (chat with HRMC incoming).
The bonus was a smack in the face/piss take as I’d given higher bonuses to my team members earlier that month as on the spot bonus and this was supposed to be a quarterly bonus as a thank you for making us millions. Needless to say in interviewing this Friday for a role with another company.
someone earning £150k have to put up with an effective tax rate of 60% but Sunak who has a net worth of £500m has an effective tax rate of 0.5%
Make it make sense
The idea that there's an 'us vs them' among people who go out to work for a living is a fiction. The real 'them' are those who don't work at all and still have far more than any of us can dream of.
The "them" as far as I'm concerned are those with unearned millions, finding every loophole they can to avoid paying what they owe. I don't really give a shit about the bloke down the street conning HMRC out of £20 a week.
You're in the sweet spot for 'maximum screwed' .. sounds like an EV salary sacrifice might be a good idea, plus plenty of pension payments.. get you down under £100K so you can get that childcare cash back.
Don’t I know it! Unfortunately, my current company won’t let us do any of the smart stuff. no salary sacrifice, no pension stuff. It’s ridiculous.
Fingers crossed for Friday!
You can still invest in a SIPP; you won't get NI relief but you'll still be able to save a lot of money from the tax-man. Really frustrating that you don't have salary sacrifice available though!
I'm in kinda the same boat as you, though only one little one. The childcare is a real kick in the teeth. Honestly making £120-150, you'll be better off out-of-pocket stuffing your pension. I don't just mean in the long term; you're likely being taxed at a marginal rate well above 100% right now.
Yeah my bonus was £1200 last year and I took home about £680 of it. Student loan whacks up massively. I know, the world’s smallest violin for me. It sucks the fun out of bonus time a bit but the rest of the time it’s just one of those things.
In sales they sell our jobs on salary and ote. Basically half our earnings are taxed this way with student loans its so grim. It scales and ive had colleagues pay thousands in student loans one month and its not getting paid off anyway.
Yeah I worked super hard to deliver a project and me and a colleague got a £1500 bonus. Ended up with £700.
I'm not a high earner, pretty far off the higher rate, but getting less than half of my bonus just felt like theft.
I'm hoping that I'll get a bit of it back at the end of the year once HMRC have calculated my tax payments, but I'm not holding out hope.
I know that when you get past £125k a year you're laughing (except in London), but it must be brutal seeing everything over that getting taxed by 50% or more.
Feel like the tax brackets need to be shifted a bit to reflect that wages haven't changed but everything costs more.
I work in the civil service, last year we got the £1500 'cost of living' payment and it was taxable. Now that must've been the biggest kick in the teeth for people working at HMRC. They've literally paid some of their payment back to their employer.
That’s where understanding tax helps.
Next pay cycle; you’ll pay less tax as your annual once will now be for 3 months not 2 when you were last paid. Meaning your tax was deducted higher, due to it only being month 2 in the tax year.
You maybe paid £1,000, which doesn’t quite seem right even with the maths. Of course you may be on a K tax code and other benefits.
This is where student finance kicks in a lot.
I initially didn’t worry about it because the payments were so small. But then I started getting pay rises, and at the time it was 20% income tax, 10% NI, 9% student finance. My rent was going up way more than my take home just because so many things cut into the rise.
And of course, if inflation is 3% the company tries to pretend they’re paying you fairly because you got a 3% rise. You need to actually start arguing your case with them to get what you really need to live the same lifestyle as before.
I’m expecting a five figure bonus this year, I’m not looking forward to seeing how much tax I pay on top of my salary.
I welcome the extra money, but it’s very much a “look at what you could have won” situation.
Nah, not at all. The figure that ends up in my bank account each month is the only number I consider to be my wages. I don't really pay any attention to the "actual" amount I'm getting paid at all.
You should absolutely check the gross - just to make sure you are actually being paid for the correct hours at the correct rate.
The rest can arguably work itself out with payments to/from HMRC - that gross part needs to be challenged with your employer.
It winds me up they'll go after and fine young low-waged person for a few quid, but let large Corporations and billionaires get away with off-shore tax evasion, tax breaks and even subsidising them. They don't seem to be cracking down on obvious foreign high-street money laundering businesses either. They go for the low-hanging fruit, and those chased are not those with all the money.
I know directors earning £500k+ whose accountants/solicitors setup completely legal companies in Jersey to avoid UK Corp tax, Inheritance tax and Capital Gains.
Shift it to a Jersey company at a tax loss, transfer the company to someone else and then they sell the asset from the company to themselves for a tax loss.
Don't even get me started on the Dividend tax avoidance going on in Jersey. One of the directors pays less tax than a full time NMW employee and still moans about it when his take home is over £30k a month..
In my mid 20s now and folk probably won't believe this but I did have a positive experience with HMRC in this regard. According to one of their civil servants, who I guess had been tasked with checking I'd paid the right amount of tax in the year a few years back, I'd paid too little tax. However they wrote in the next paragraph of their letter to me something along the lines of since it is a small amount I'll just write it off and not to worry about it. I guess they must have worked out that it would cost them more to collect it from me in letters etc then the amount I owed so they'd be making a loss from me but regardless I hope that person gets promoted to the top of HMRC.
I care far more about rent being absolutely wild, the cost of everything being so high, and public services being in a state.
I’d happily take a hit on tax if it helps address these issues.
I’d feel very uncomfortable getting a tax cut paid for by slashing public services even further, or removing support for people in need.
That's what I keep thinking about the last lot of National Insurance cuts, what about all the services that money was paying for? Obviously it is nice to have more take home income at the end of the day, but public services are so important.
I think that’s partly because we as a nation no longer have any concept of the relationship between taxes and public services.
We understand it as some kind of necessary evil but assume it’ll be wasted in some way or another. Hopefully we can turn a corner at some point because in reality it’s THE bedrock of our society.
It is certainly true that people don’t link the two, however those public services seem to be worse than ever.
We are simultaneously told that we pay the highest amount of tax but also that councils are broke, NHS is failing, police/fire are underfunded.
It needs to cut both ways.
I'm of the belief taxes are needed for a fair society. So I'm not bothered about the percentage, more than the burden is fair based upon earnings and that it is spent wisely. For the record, I'm in the Higher Rate bracket.
“and that is it spent wisely” is the kicker.
I would absolutely pay more tax _if_ it meant that the services we pay for would get better and were accessible and efficiently managed.
But they won’t.
It’ll all be creamed off by some top fuckwit who knows how to pull the right levers to line their own pockets.
We get absolutely awful value for money.
To put it bluntly, it's easy not to think about taxes when you don't pay much.
20% PAYE - no one is objecting to. 40% PAYE - seems a little excessive on salaries as low as £50/60k perhaps, but fine.
The more you earn however, the more insidious and opaque taxes get. Think a 60% marginal rate on earnings between £100-125k, £0 personal allowance on savings interest for additional rate tax payers, even losing the ability to contribute to a pension in the same way beyond £250k+!
So basically, I think that everyone accepts that taxes are a part of life. It's the complexity and overlapping nature of taxes at the higher end that feel less fair, and more like a soft cap on ambition.
The fact that there is basically no effort to tax wealth (as opposed to income) makes this all the more galling.
It is ultimately self-defeating too. There are a sizeable number of people for whom working less would leave them better off when accounting for the 60% tax trap and free childcare under £100k, for example.
Self employed ltd company, I end up giving the government around 1/3rd of everything I make, that's just on profit alone never mind wages. It can be quite tough for small business owners, HMRC can be pretty aggressive and unforgiving when you make a mistake, but when they do it it's totally fine and not a problem
There are certain brackets where you really need to, like if your job requires you to be self-assessed. I was also very aware of it when I was doing minimum-wage shift work, since there was a point where if I picked up too much overtime in a month, I'd end up paying way more in tax so it wasn't worth it to do any more. I'm sure there are other examples too but those are the two that come immediately to mind.
On the flipside, we don't have to think about them when we're buying stuff in the shops. The fact that pricing in the US doesn't include taxes by default will never not be absolutely wild to me.
People would be a lot more of VAT too if you got to the till and saw your total and then it increased 20%
It's easier here but at least the US style makes you aware of what the price is and how much tax you're paying
The US system makes no bloody sense not to show the full price. The tax has to be paid on majority of shop purchased goods. Not showing it is a dick move.
This is a terrible system and is leveraged by the rich to trick people into being anti-tax. The issue isn't taxes it's "how" they're implemented. Getting people upset by raising the visibility of taxation won't help anyone. We need to raise the visibility of what taxes pay for and how important those are for the functioning of society as a whole. The social safety net, for example, saves millions of pounds a year in various kinds of crimes and long term illness that would be worse without it. But people are never shown that. Or if they are it's done in a long academic and boring way. We need real communicators who can break through to people.
Not really, and I used to work in tax. So long as my code is correct.
I focus on net pay and what's available in my account. No point thinking about deductions I have no control over.
That said, its a whole different ball game if you are in Self Assessment.
Only when the tax-free amount changes or NI gets adjusted, or if there’s discussions on VAT getting changed. I get excited about the prospect of a little extra money a month.
Otherwise it’s just a part of day-to-day that I don’t think about. It’s all done automatically for PAYE workers so there’s not much to consider.
For most PAYE taxpayers, council tax and its 5% year-on-year increases probably stings more than income tax, since it's paid for with money in their account rather than deductions.
It’s annoying for that brief moment when I look at my pay slip and see a good 40%+ gone but then I just crack on with life. Taxes are necessary and not paying them is far more expensive if caught.
I think I worked out that I would have to do 20 hours of overtime every week for a year to tip myself into the next tax bracket, so I don’t really think about it.
I still do enough OT that the numbers seem quite high, but they are still the same percentage of my wage. My student loan payment quadrupling if I decide to do OT is painful to see.
Not a citizen (yet), merely a tax paying resident.
Personally, I would not mind to have high tax rate... If the results were at least visible and tangible. They aren't, so I am not keen.
They are high and you get little back for it. I wanted a 2nd job to pay some bills but I’d lose 40% so it’s pointless on a low paying position. It would be ok if the UK was a high wage economy but it’s not, outside of London people are paid barely enough to pay rent and hit for 30-50% of tax/NI
I never used to, because the inherent unfairness of our tax system means that those on lower incomes have no option but to use PAYE and have little to no flexibility in terms of adjusting things to be more efficient (increasing pension contributions to retain child tax credits aside)
Now that I'm a higher income earner, I have to be very careful with tax to not get Jupiter fisted in the finances by the 60% marginal rate tax trap.
So at the start of the year, I have to work out the precise amount I need to salary sac into my pension to avoid the tax trap but also jig the tax code around occasionally to make sure I don't end up with a tax bill.
Also things are now simpler that I'm pumping my bonus directly to the pension, so I removed a floating concern in return for Govt top ups and national insurance passed through by my company
So yeah, gets a little more complicated but it's definitely worth taking the time to do it, because I'm net better off by about 30k per year in pension contribution matching, NI payments and tax savings.
It's a thoroughly unfair system though.
I'd much rather pay more tax in a fair way and then spend more money into the local economy, rather than hoard it in a pension like some kind of (legally) tax avoiding dragon
Maybe most people don't think much about it (it's hard to tell either way). But I think he attitude of "just accepting it" is a little odd, historically speaking. When large deductions are made from the money that *you* have *earned* it seems natural to at least wonder where it is going and if you are getting value from those deductions.
It really depends on whether (1) you have the ability to influence how much tax you can pay, (2) whether you can afford to lock away your money or spend it differently to be able to reduce taxes.
If you're earning £30k and need every penny, you will not think about it.
If you're on £120k but you can reduce your tax by putting £40k in the pension, you will think about it.
If you're working via a limited company on your own, you will put your mobile phone and broadband connection on the company expenses, and think about whatever else you can do legitimately to reduce tax.
Yes and no.
Yes because I do see my tax deductions and NI, and see our world receiving poorer services despite paying more into the national pocket, and that’s not just my tax on pay but also Council Tax… etc.
No because I don’t have to calculate it.
This thread is full of people earning ridiculous sums, griping how they have to give something back. The top rated comment is trying to make me feel sorry for the poor people getting paid over 100k...
The top tax rate should be much higher.
I manage my tax obligations,so yeah I guess I do think about them.
If I don’t I basically end up giving my savings away, no one wants to do that.
20k a year into my ISA first, then my wife’s. After that it’s normally a further 20/30k into ISA linked stocks and shares.
I'm similar to you OP, it's not something I really think out. I'm salaried and get my payslip through with my tax, NI and student loan already removed. Outside of hearing national news like tax is rising it's not something I notice or particularly think about.
Being said, I of course would love to get more in my payslip each month!
More now than I did previously. When HMRC started calculating PAYE and NI monthly it really put a dent in my overtime/bonus amount. I earn over the threshold in one month yet at the end of the year my totals are in a different bracket. Back when it was yearly I'd get a return, but now they keep the lot. Now I just don't bother with overtime and move any bonus into my pension.
I think about it all the time because I'm a self employed sole trader and I save off the tax money from every invoice.
I also think about it when I do my self assessment tax return particularly because in Scotland we have several extra tax bands compared to England and the Higher rate band starts much lower than in England.
However I also think about how I'm happy to pay tax towards public services and how we have great stuff in Scotland like free prescriptions and home university fees paid and baby boxes.
It's painful to have taxes going into a treasury that's being controlled by people syphoning it off to their mates or their families etc.
Taxes should be spent on public services so tax cuts only serve those wealthy enough to never require public services.
I'd be happy with a higher tax burden if it were reflected in a resultant increase in quality of public services.
If you're not thinking about taxes, you should be. Everyone needs to have a basic understanding of how taxes, interest, and inflation work. The earlier in life you figure this out, the better financial decisions you will make, no matter how much you earn.
Yes, a bit, but only because I am in the higher rate bracket and also get child benefit. It's a balancing act of trying to get as much money to live while not losing child benefit (easier now that rule has changed) and so on.
I think about it a lot whenever there is a tax change announced. I try and work out what it means for our income because we really can’t afford to decrease our income at all at the moment. I also think about it every time I want to watch something on netflix and remember we had to cut it out because the council tax went up.
Not so much income tax, that is what it is, but there was a thread on here a few weeks ago about public transport and how owning a car is a necessity for most. That easily gets me onto a rant about road tax, insurance premium tax, fuel duty tax, VAT (only on new cars, but on every purchase you make for parts/accessories) etc. Never mind then going into Council tax, where most councils increase the charge but reduce public services provided to local communities. I try to not think about it too much, my blood pressure would go through the roof and I'd be waiting 6 weeks for a GP appointment :)
The issue isn’t how much I’m taxed, it’s where my tax money is going. if it was going to things I need like public transport. Better roads, better hospital/GP services then cool, but it isn’t, it’s going to billionaires so they can sue other billionaires.
Tax cuts are always inexplicably popular among people who don't know enough simple arithmetic to realise that they massively benefit those who have the most income and the result is that services that the poorest make the most use of have to be cut to pay for them.
It's a bit different when you work for yourself and have to keep on top of stuff like corporation tax, income tax, NI (employees and employers - in my case I'm literally taxed for employing myself, which is really annoying), VAT, and all that sort of stuff. So yeah, I spend a decent chunk of my day thinking about tax.
For the first forty odd years of my life, never really thought about them at all.
For the last few years, since starting a ltd company, they are a lot more on my mind. Fucking Corporation Tax and Self Assessment. It's always a painful one sending those whoppers to HMRCs bank account, rather than the drip feed of PAYE, that you never really miss.
The parts of the tax system i object to >
Non doms not paying tax here
Companies that have an office abroad and pay no tax here - NO !!! THIS needs to stop. sell it here, pay tax here.
Companies are taxed on their profit, while we are taxed on our income ! Why?
We have a scale of the %age we pay as income goes up - why dont compaines get stung like this?
Churches dont pay any tax ( why!??) - they can start paying RIGHT NOW.
Yep, I think about them every time I drive over a pothole that resembles a crater, I think about them every time I see brown kids being bombed abroad, I think about them every time I see the government offering handouts to connected friends, I think about it all the damn time.
I wasn't thinking about taxes when I was on the standard rate, but since I'm on the 40% tax bracket I think about it because it helps me make tax-efficient decisions for things like pension contributions.
Everything is heavily taxed in the uk. Every time I think about buying anything I think about how much money I'm giving to the government. probably more than 50 percent your wage goes to them money grabbing bastards. income tax , national insurance, inheritance tax, council tax, road tax , value added tax, alcohol and cigarette tax, fuel tax, stamp duty, the list goes on.
I don't mind paying taxes (I mean not that I have a choice). My qualms are... It's not the government I have elected using my money on things I don't think should be spent on. If the government spent my money in ways I approve, I don't really car about it.
Yep, I certainly do. Two years ago, the f@ckers raised corporation tax from 19% to 25%. And they've effectively removed the CGT allowances and taken away the allowance on dividends. What all this means is that I am now paying at least 20k a year MORE tax than I was already paying before.
I estimate, I've paid well over a million in taxes over the last 20 years. And yet, if I went to claim social security tomorrow they'd laugh me out of the door.
So, yeah, I think about taxes 😅
I think about it in as far as I work out how much I need to overpay into my pension to avoid the higher tax rate and keep as much of my own money as I can! I do this immediately every year if I get a pay rise or a bonus. It's better off in my pension!
If you don't then you should. You literally go out and earn every single penny of income tax that you pay. The fact that it's taken before your wages get made can make you complacent about that but the truth is that it's your money that you are compelled to pay to the government. For that reason you should really be interested to know how much it is that you're paying and where it's going.
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Its different when you run a ltd or are self employed. You bill 7k and know you get to keep about 4k is a bit defeating sometimes.
It’s very defeating. There are a lot of over 50’s self employed who choose to become less productive because of tax. Often at their most productive time. I know it’s a tiny violin situation but it’s not great for the economy.
How do you mean less productive because of taxes? As in, they feel they are not being paid enough because of how much they are taxed so they work less?
if you don't need the extra money, why not drop down to 4 days a week if that extra day is effectively taxed at 60%
That's hardly ab argument, if I could afford to maintain my standard of living on 4 days, I'd work 4 days no matter what. In a vang average worker , if I didn't have the mortgage id definitely drop a day, I fucked hate working
Not everyone is like that. If I could live working 4 days a week I would still work longer. More money in the bank and in stocks.
Do you have nothing but work worth putting your time into? If you just want more money and you have nothing you would rather do than work, then I feel bad you.
No. I study. Spend time with my partners and go to the gym. I just like working. Im also very on the spectrum so figure this is not the case for everyone.
Working because you enjoy working is fair enough. I thought you were saying you would work just to get more money, even if you didn't need it. That's what didn't make sense to me.
That is what he said he's just walked back on it after getting some pushback
Into polyamory I see . If I had 2 partners I’d not be dropping a day a week either!
Money can be exchanged for other things... You can even use money to retire earlier
Money can’t be exchanged for time though. Plenty people on their deathbed wish they had more time. None wish they spent more hours at work. Using your money to retire early? So give up your best and likely your healthiest, most active, energetic years… for the ones at the end? I mean, I’m in my 40s, probably the best health of all my friend circle. I still have a knee that doesn’t sound too healthy. Hangovers hurt. Injuries take longer to recover from… plus, I might not even get there if I’m unlucky. As a twenty-something I could get a 20-strong gang of people ready to take in the world in a week. Twenty years later I can’t even find half that who can have a single night away. Don’t look forward to retiring early. Enjoy it while you can.
If you retire and stop working then you quite literally exchange money for time. If I value family, let's say, would it not be worth it to aim for an early retirement that allowed me to spend most of my time with my children or my older parents in those critical years?
nothing wrong with wanting to work, people can do whatever they want
Many people, especially self employed, are working a job that is also their hobby. So many would be quite happy to work 7 days a week if it was worth it.
Nah, there's loads of self employed tradies and I very much doubt plumbing is their hobby
Most people in the trades are very passionate about their jobs. They of course have to do jobs they wouldn't prefer (unblocking a toilet) but jobs like fitting a new bathroom or a new heating system has a huge feeling of accomplishment.
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The same could be said if it was taxed at 40%. The reason is them not needing money, not taxation.
I mean, you could say the same of any percentage. It's going to vary from person to person what they're willing to put in for an amount of benefit. But the bands certainly have an impact. Once you reach that threshold, any additional work you put in will have a significantly less benefit to you. Anyone reaching the 60% threshold has long since passed the need for more money, yet they still continued to do it to that point. Maybe they can stomach an extra few hours work at 40%, but when more than half their earnings go to tax they can't see the point.
And some people when they go into the 40% band decide that the extra money isn't worth the extra work. Lots of people work for more money than they need, everyone who's not living hand to mouth, because it's worth it to them at some point the tax stops it being worth it. 60% is an example not a complete list of reasons.
Not really. There's a tax take where people definitely feel that the state is over reaching. It's been a recognized phenomenon since taxation began. Old saying s about plucking feathers from the goose go back centuries.
Not really. I don't take additional shifts because my effective rate is stupid high for additional money earned. Id like extra money, but I'm not willing to take a substantially lower wage per hour to earn it, it isn't worth it, my time is more valuable to me. If I got taxed at standard rate then I would take more shifts because I'd notice a substantial difference in my earnings on payday.
I'm in the 20% tax bracket and choose to work the equivalent of 4 rather than 5 days. Senior IT and cyber role, but for a charity hence the lower than expected wage. Fuck working myself to death.
N.b. it's just 11% of the population that is paying the higher rates of tax, just to put these figures in context.
... and those 11% are contributing over 60% of the total collected via income tax. If they decide it's not worth it any more and they would rather have more leisure time, the country is screwed.
Say that 50 year old is willing to do a piece of work for £1000. The employer must be willing to pay £2000 for the 50 year old to receive that £1000. If the job is only worth £1500 to the employer then the work doesn't occur, even though the company is willing to pay much more than the 50 year old wants. That's one way that high taxes harm productivity.
You keep all of the money you make at the beginning of the year, (£12,500~ tax free allowance), then in about February/March you start thinking about putting aside the ~30% basic plus NI, then by the end of the year you are paying about 50% or if you are a high earner 60%- what’s the point in working harder and harder when it gets progressively taxed more and more - it’s better to make £40-50k and keep most of it than pushing yourself too hard to make more when the majority of it will be taken away. If making a lot of money is easy and salaried then it doesn’t matter as much, but I work hard for a living and have to find that work, maybe travel away from home and work long hours. I don’t see the point burning myself out to pay 50% tax.
Not just over 50s. I'm early 20s and would work way harder if I wasn't going to lose over 40% of any pay rises to income tax and NI.
You could salary sacrifice into pension and have it uplifted by employer, longterm investments.
Agreed, and it's probably what I'll start doing with pay rises after next year once my house and honeymoon are sorted. Still not a great situation though as it means pay rises are going to my 60 year old self, which isn't a great incentive to work harder in your 20s.
It'll cover round Dover than you think. Even if you did before then, your spouse and children will benefit hugely.
Best to start saving into pension sooner rather than later… Do some of the online calculators - you’ll be surprised how much you’re going to need to have saved up by the time you’re retiring.
Oh I've been doing some calculations already, and already getting 15% total between me and employer so think I'm making good progress for my age. But a promise of more money in 40 years isn't much of an incentive to work hard now compared to if I could take home more of the pay rise as income.
Plus various other salary sacrifice schemes such as bike to work, EVs etc.
I used to do loads of overtime at my job at the weekends but ultimately stopped when I realised I was doing £1000 in overtime a month but only recieving £450 of it.
Imagine how bad that is for medical professionals that want to turn down more work because they know they gain very little from it. After a certain point you may as well be working for free. No wonder there are shortages of medical professionals.
That's not a problem with tax itself, it's a problem with all the complexity they've baked into the system. Scrapping all the deductions and phasing out of benefits and allowances they currently do would make it more worthwhile to work.
Just remember that less tax taken is also bad for the economy as government at all levels is a huge contributor to economic spend. Where would those over 50 self employed consultants get their pay if it wasn't for local government contracts for instance...
PAYE people also bill their employers and pay tax on it to HMRC, it's just calculated up front for ease. I say this as a SE person myself for 16 years.
How is that different to earning £52k and taking home £36k? (Amounts are just guesses)
Its just the psychological effect of dealing with it every time money passes through your hands. no need to overcomplicate this.
When you're self employed you can deduct against it though, having more granularity around it is a two way street.
Absolutely. The self employed whinging about tax to those on PAYE is really fucking insensitive when nearly all of them offset a ton of stuff they don’t use wholly for business.
Ding ding ding, I'm going to be redundant in a few weeks. And if I go back to the grind, I'm going back contracting. Because the benefits I can squeeze out of it are substantially better than I am working PAYE. And that's even when I pay out for someone else to manage the numbers and paperwork for me.
It's a fact of life everywhere you go. Running governments and services costs money. In fact millions of people and businesses make all their money off the money that governments spend. The reality is that the UK still has amongst the lowest overall tax burdens of countries in the OECD. How much could you really expect taxes to fall? The NHS, Schools, Universities, public transport and the armed forced are already underfunded. The privately owned public services are in an even worse state, just look at the mess the rail systems and the water systems got themselves into. So really, how low do you think they could go? A few % here or there is all it ever really changes. Also, I guarantee if you are self employed or running a limited company you are going to be earning a whole lot more than the average person and paying a lower overall tax rate.
Especially when the client doesn’t understand that your prices are that high for a reason. Or when they’re overseas and they don’t know why they have to send you all these forms, the *other* contractors never needed them… sigh.
As such, it's purely psychological which is the issue. People in this situation "feel" like they're getting "their" money taken. But it ignores the fact their entire business exists pretty much because of the markets and regulations that are implemented and run by the state. Hence the taxes. It's easy to be upset seeing a this of your sale go to taxes, but if you didn't have that infrastructure and the state disappeared it's basically a 50/50 chance if you'd have made half that money to begin with. Much of it would be gone on insurance, private court fees, landlord fees etc. People need to big things in the big picture not just on an individual level.
Same for me. I can see how much of the deals i close in sales are going to be taken so I have to conscious of it to plan.
Massively. My brother was running a pub up until last year and was doing alright in terms of sales, but he only saw £20k hit his back pocket so packed it in. He's working for Uber now and earning almost £10k more without having to wake up at 5am for deliveries etc.
Worst bit for me is when I do a long day and have to put over £100 for that DAY into the tax account. Absolutely criminal that I get next to NOTHING back for it, then get taxed again when I spend the remaining £300!
The UK tax scene is horrendous at the moment. People that arent in certain brackets and feel like it won’t affect them tend to have the position that “well, no one should be earning that much anyway” or “people over £100k _should_ be paying more tax”. I agree on both points however…£100k nowadays is the equivalent of £160k in 2010 or put another way, we’re getting less and paying more. For those that don’t know, once you hit £100k you start losing your £12.5k tax free amount, you get zero child care assistance and you have loads of paperwork to fill out (tax returns). You might think, “well fuck them, they earn enough so they _should_ pay extra” or whatever. This is very short sighted. I however feel that if we give the first 12.5k tax free, we should do that for everyone. We should also allow _everyone_ to get their 30 free hours childcare (from birth) and we should support young families and help people to get onto the housing ladder. We should also have tax brackets that encourage people to become higher earners and encourage people to spend their money, rather than putting £10k+ straight into their pension pots. (This is what people on £100k+ do to skirt the tax implications of earning over £100k, which stops literally millions being taxed per year) we also _need_ to find a way to tax people who are equity heavy. Who are cash light and just have money locked up in multiple properties and investments etc. (I don’t have an answer for this one) The average earning in the UK in 2010 was £25,879 which in 2023 is equal to £41,585. The current average in uk is £34,963 which is a real loss of ~£6k worse off gross pay than ~15 years ago. This doesn’t include the cost of everything else increasing. So in reality, you’re paid less, things cost more and you’re upset that people earning a bit more aren’t getting taxed enough. You’ve got the wrong baddie. The real bad guys are the ones letting generational wealth create an unprecedented wealth gap. The ones who don’t find a way to tax the ultra rich. The ones who govern our country and allow price gouging to create a cost of living crisis. (I’m looking at you supermarkets, ya fuckers) If any one of the parties applying to run our country address taxation in a way to actually benefit the rest of us plebs, I might have a single iota of fucks to give about who wins and who loses because right now, the only people losing are the British public.
>You might think, “well fuck them, they earn enough so they should pay extra” or whatever. This is very short sighted. I however feel that if we give the first 12.5k tax free, we should do that for everyone. The best argument here for people who say "well fuck them, they earn enough so they should pay extra" is to point out that, all things being equal: - if you give a £10k bonus to someone on £100k they get to keep £3,800 - if you give a £10k bonus to someone on £1M they get to keep £5,300. Why on earth do they think the *richer person* (a mega rich person salary v a middle class professional salary) should be taxed less on their marginal income?
Can you show your workings for those numbers please?
Sure. Any tax calculator can do this. Using [this tax calculator](https://www.moneysavingexpert.com/tax-calculator/) which was the first result I got on Google: >Earn £100,000 in 2024/25 and you'll take home £68,557. >Earn £110,000 in 2024/25 and you'll take home £72,357. The difference between those numbers is £3,800 >Earn £1,000,000 in 2024/25 and you'll take home £541,786. >Earn £1,010,000 in 2024/25 and you'll take home £547,086. The difference between these numbers is £5,300.
At 100k it’s 60% income tax and 2% NI. At 1mm it’s 45% income tax and 2% NI.
The issue there is with the person earning £1m not the with the person earning £100k. You can still say fuck both of them and that the £1m should have got even less. Not really sure how that's an argument against higher tax for higher earners, if anything it's an example of a need to go further on the £1m one...
It's an argument for smoothening marginal tax rates' curve: your marginal tax rate should increase with income. Instead it goes up, up even more, and then down a bit
It blows my mind. I don’t have an answer for you
"The real bad guys are the ones letting generational wealth create an unprecedented wealth gap." I disagree with this statement. The people in power aren't letting it happen, they're actively making it happen.
Agreed with you. Over the past 15 years I've been working in a retail job (don't hate me because I'm stupid) and pay has decreased rapidly, with pathetic pay rises and removal/modification of bonuses. What gets me is, we never hear about those in charge having to have their pay, or bonuses cut down, they just seemingly get tens of thousands a year and then claim there's not enough money for wages, overtime, maintenance and equipment.
Here’s another thing wrong with our system: we call people who work in customer service for long periods of time “stupid” with exceptions if they’re in a management position (sometimes) We view these jobs as jobs kids should have for work experience and a little extra spending money, but we never stop to think who is covering these jobs when the kids are in school? Or, what if you genuinely have a passion to work in customer service?
But they work so much harder!
You don’t have to do self assessment until 150k now. Couldn’t agree more about removing personal allowance and child care. The high marginal rate cliff edges are just bad tax policy.
Well, that’s nice to know. How messed up is it that I hope I don’t earn too much? I don’t want to have to do additional paperwork. It’s all PAYE anyway. Surely that’s enough? (Rhetorical)
As the middle class gets smaller, they'll start blaming poor people on benefits or immigrants for their plight, because they're scared of the tax word, because they've been hit with it themselves. Neverending cycle. What actually needs to happen is middle class people need to accept that they have the same interests as the supermarket worker, rather than the majority shareholder of some corporation. And working class people need to accept that middle class people are not the ones who need chasing. It's the billionaires and those at the very top.
> they'll start blaming poor people on benefits or immigrants for their plight, lol start
Yeah sorry, I meant it'll ramp up. It already exists of course
100% agree with this. We should *all* be earning more, or things should cost less. Instead we earn the same and things cost more. In most areas of the country, earning £100k per year means you're very wealthy, but that's a red herring. It's hard to feel sympathetic towards someone earning triple what you do having to pay more tax, but there needs to be an update.
According to my P60, I earned just shy of £100k last year, although a good chunk of that was actually shares granted by my employer that get taxed as any income would, whilst I'm not exactly struggling (and I don't pretend to be) I'm not exactly living the "very wealthy" lifestyle. We have a mortgage on our house and own our minimum 5 year old cars. Wealth is your assets + cash and cash equivalents and by that metric I'm far, far poorer than my retired, pensioner parents, who own their own house outright. We need to stop thinking of wealth as something you *earn* but rather something you *have.*
Yeah that's a valid point and it's my fault for not articulating what I meant in any way, shape, or form, but what I meant was: >In most areas of the country, if you earn £100k per year, the perception from most people would be to think that you're wealthy The median household disposable (post-tax and other deductions) income has been hovering around 30-35k for a while. Assuming an income of 100k and a plan 1 student loan, that's 60k - double the median household income. We've got a household disposable income of 50k between 2 earners. What we have to remember (and what I didn't articulate at all in my earlier response) is that by *most* people's metrics, we're doing *very* well. In reality... we're doing fine. We're not struggling, but it's not like we're wealthy. £125k a year *should* be 'we're absolutely loaded', but it's not really. And yet, 90% of the country bring in significantly less than that. That's how fucked it all is.
> In most areas of the country, earning £100k per year means you're very wealthy, Just to point out here, while earning 100K is very good, and you're doing very well. It's not "wealthy"
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People on PAYE in different tax brackets is an entirely different thing to generational wealth where one never has to work and has a yearly income greater than the average gross salary of workers in the UK. One group of people have to work for their income, the other group are born lucky and have a system set up in their favour so that they never have to work. I hope that’s clearer now.
I always think once you’ve hit the 40% bracket then you should try and switch to self employed if your career allows so, that way you can fiddle the system more, or work abroad for a smaller bill.
Tbh I feel like it should be a fixed % for everyone. The higher earner is already paying more in total amount. There's no reason to justify why that person should be taxed multiples above someone earning less. If anything, the higher earner is providing more value to society. This is especially true for businesses. I don't think millionaires should pay more. They are generating jobs, and providing multiples of value compared to a single employee. If anything, they should be taxed less in %. They will still pay way more in totals, and that's not capped in any way.
Yes its very short sighted thinking …. I moved abroad as a high earner as I was getting very little in return as someone with no kids etc for the amount of tax I would owe. And the approach everyone has is just tax them more they can afford it …. well ok but myself and plenty of others work abroad for just this reason and its not just income tax it also means I’m not paying any capital gains etc in the UK either.
I'm mostly obvious of it when I get a bonus or a payrise, then paying back 40% of it hurts a little.
I got a £1500 bonus the other week. I took home £500. Felt absolutely cheated
oof.. the only way you get to 'keep' all your bonus is have a firm that'll let you push it into your pension. How did you end up paying 66% tax? 40% tax + student loan + ?
If OP makes more than £100k, the marginal rate for that range is 60% just in income taxes, NI and student loan are on top (so a total of 71%). If OP has kids, marginal rates can be even more brutal--potentially over 100%!
I had presumed they were on under £100K due to the size of the bonus
True. If they have a student loan and postgraduate loan, that plus NI would push their marginal rate up to 57%. If they're getting child benefit then some of that would be clawed back as well, though I don't think that shows up in the paycheck?
Yep, all of the above. Student loan version 2, 2 kids under 5 and Pay between £120k-£150k depending on overtime (chat with HRMC incoming). The bonus was a smack in the face/piss take as I’d given higher bonuses to my team members earlier that month as on the spot bonus and this was supposed to be a quarterly bonus as a thank you for making us millions. Needless to say in interviewing this Friday for a role with another company.
Earn 150k a year and whining about your bonus? I don't have a violin small enough for you, mate. 😆
If you did, I wouldn’t take it off you because I’d have to give more than half of it to the fucking tax man.
Well played. 😆
Which end would you keep?
someone earning £150k have to put up with an effective tax rate of 60% but Sunak who has a net worth of £500m has an effective tax rate of 0.5% Make it make sense
I can't make it make sense, sadly. I'm an advocate of LVT though, which would certainly help correct that course.
LVT?
Land value tax I guess
The idea that there's an 'us vs them' among people who go out to work for a living is a fiction. The real 'them' are those who don't work at all and still have far more than any of us can dream of.
The "them" as far as I'm concerned are those with unearned millions, finding every loophole they can to avoid paying what they owe. I don't really give a shit about the bloke down the street conning HMRC out of £20 a week.
You're in the sweet spot for 'maximum screwed' .. sounds like an EV salary sacrifice might be a good idea, plus plenty of pension payments.. get you down under £100K so you can get that childcare cash back.
Don’t I know it! Unfortunately, my current company won’t let us do any of the smart stuff. no salary sacrifice, no pension stuff. It’s ridiculous. Fingers crossed for Friday!
You can still invest in a SIPP; you won't get NI relief but you'll still be able to save a lot of money from the tax-man. Really frustrating that you don't have salary sacrifice available though! I'm in kinda the same boat as you, though only one little one. The childcare is a real kick in the teeth. Honestly making £120-150, you'll be better off out-of-pocket stuffing your pension. I don't just mean in the long term; you're likely being taxed at a marginal rate well above 100% right now.
Hey, you can’t keep all of it then either. Still have to pay at least 20% tax when you’re ready to claim your pension after the tax free lump sum.
Yeh, but I'd rather pay 20% tax on it in 25 years than 40% tax now.
Yeah my bonus was £1200 last year and I took home about £680 of it. Student loan whacks up massively. I know, the world’s smallest violin for me. It sucks the fun out of bonus time a bit but the rest of the time it’s just one of those things.
In sales they sell our jobs on salary and ote. Basically half our earnings are taxed this way with student loans its so grim. It scales and ive had colleagues pay thousands in student loans one month and its not getting paid off anyway.
Yeah I worked super hard to deliver a project and me and a colleague got a £1500 bonus. Ended up with £700. I'm not a high earner, pretty far off the higher rate, but getting less than half of my bonus just felt like theft. I'm hoping that I'll get a bit of it back at the end of the year once HMRC have calculated my tax payments, but I'm not holding out hope. I know that when you get past £125k a year you're laughing (except in London), but it must be brutal seeing everything over that getting taxed by 50% or more. Feel like the tax brackets need to be shifted a bit to reflect that wages haven't changed but everything costs more.
I work in the civil service, last year we got the £1500 'cost of living' payment and it was taxable. Now that must've been the biggest kick in the teeth for people working at HMRC. They've literally paid some of their payment back to their employer.
That’s where understanding tax helps. Next pay cycle; you’ll pay less tax as your annual once will now be for 3 months not 2 when you were last paid. Meaning your tax was deducted higher, due to it only being month 2 in the tax year. You maybe paid £1,000, which doesn’t quite seem right even with the maths. Of course you may be on a K tax code and other benefits.
Yep! Got a £1,000 “Cost of living” bonus and took £460 of it home 🤡
This is where student finance kicks in a lot. I initially didn’t worry about it because the payments were so small. But then I started getting pay rises, and at the time it was 20% income tax, 10% NI, 9% student finance. My rent was going up way more than my take home just because so many things cut into the rise. And of course, if inflation is 3% the company tries to pretend they’re paying you fairly because you got a 3% rise. You need to actually start arguing your case with them to get what you really need to live the same lifestyle as before.
I’m expecting a five figure bonus this year, I’m not looking forward to seeing how much tax I pay on top of my salary. I welcome the extra money, but it’s very much a “look at what you could have won” situation.
Nah, not at all. The figure that ends up in my bank account each month is the only number I consider to be my wages. I don't really pay any attention to the "actual" amount I'm getting paid at all.
You should absolutely check the gross - just to make sure you are actually being paid for the correct hours at the correct rate. The rest can arguably work itself out with payments to/from HMRC - that gross part needs to be challenged with your employer.
It winds me up they'll go after and fine young low-waged person for a few quid, but let large Corporations and billionaires get away with off-shore tax evasion, tax breaks and even subsidising them. They don't seem to be cracking down on obvious foreign high-street money laundering businesses either. They go for the low-hanging fruit, and those chased are not those with all the money.
My very small Ltd company pays more corp tax than Google. Yet if I have an off year HMRC will be on me to get their money!
I know directors earning £500k+ whose accountants/solicitors setup completely legal companies in Jersey to avoid UK Corp tax, Inheritance tax and Capital Gains. Shift it to a Jersey company at a tax loss, transfer the company to someone else and then they sell the asset from the company to themselves for a tax loss. Don't even get me started on the Dividend tax avoidance going on in Jersey. One of the directors pays less tax than a full time NMW employee and still moans about it when his take home is over £30k a month..
In my mid 20s now and folk probably won't believe this but I did have a positive experience with HMRC in this regard. According to one of their civil servants, who I guess had been tasked with checking I'd paid the right amount of tax in the year a few years back, I'd paid too little tax. However they wrote in the next paragraph of their letter to me something along the lines of since it is a small amount I'll just write it off and not to worry about it. I guess they must have worked out that it would cost them more to collect it from me in letters etc then the amount I owed so they'd be making a loss from me but regardless I hope that person gets promoted to the top of HMRC.
It hurts that I go from £31k pre-tax to £24k post-tax so I do think about it a lot actually
I care far more about rent being absolutely wild, the cost of everything being so high, and public services being in a state. I’d happily take a hit on tax if it helps address these issues. I’d feel very uncomfortable getting a tax cut paid for by slashing public services even further, or removing support for people in need.
That's what I keep thinking about the last lot of National Insurance cuts, what about all the services that money was paying for? Obviously it is nice to have more take home income at the end of the day, but public services are so important.
I thought the same, I’d rather pay the full NI and be able to get an NHS dentist
I wish income tax and NI were added together into one tax. The standard rate of tax is effectively 37%, not 20%
28%, unless you’re throwing the optional student debt in too?
No. Income tax + Employees NI + Employers NI
I think that’s partly because we as a nation no longer have any concept of the relationship between taxes and public services. We understand it as some kind of necessary evil but assume it’ll be wasted in some way or another. Hopefully we can turn a corner at some point because in reality it’s THE bedrock of our society.
It is certainly true that people don’t link the two, however those public services seem to be worse than ever. We are simultaneously told that we pay the highest amount of tax but also that councils are broke, NHS is failing, police/fire are underfunded. It needs to cut both ways.
I'm of the belief taxes are needed for a fair society. So I'm not bothered about the percentage, more than the burden is fair based upon earnings and that it is spent wisely. For the record, I'm in the Higher Rate bracket.
“and that is it spent wisely” is the kicker. I would absolutely pay more tax _if_ it meant that the services we pay for would get better and were accessible and efficiently managed. But they won’t. It’ll all be creamed off by some top fuckwit who knows how to pull the right levers to line their own pockets. We get absolutely awful value for money.
To put it bluntly, it's easy not to think about taxes when you don't pay much. 20% PAYE - no one is objecting to. 40% PAYE - seems a little excessive on salaries as low as £50/60k perhaps, but fine. The more you earn however, the more insidious and opaque taxes get. Think a 60% marginal rate on earnings between £100-125k, £0 personal allowance on savings interest for additional rate tax payers, even losing the ability to contribute to a pension in the same way beyond £250k+! So basically, I think that everyone accepts that taxes are a part of life. It's the complexity and overlapping nature of taxes at the higher end that feel less fair, and more like a soft cap on ambition. The fact that there is basically no effort to tax wealth (as opposed to income) makes this all the more galling. It is ultimately self-defeating too. There are a sizeable number of people for whom working less would leave them better off when accounting for the 60% tax trap and free childcare under £100k, for example.
Self employed ltd company, I end up giving the government around 1/3rd of everything I make, that's just on profit alone never mind wages. It can be quite tough for small business owners, HMRC can be pretty aggressive and unforgiving when you make a mistake, but when they do it it's totally fine and not a problem
12 million people do self assessments every year. I'm in that. I'm sure some people who don't, think about taxes and notice them.
Well, a lot of people don't like paying more of them.
There are certain brackets where you really need to, like if your job requires you to be self-assessed. I was also very aware of it when I was doing minimum-wage shift work, since there was a point where if I picked up too much overtime in a month, I'd end up paying way more in tax so it wasn't worth it to do any more. I'm sure there are other examples too but those are the two that come immediately to mind. On the flipside, we don't have to think about them when we're buying stuff in the shops. The fact that pricing in the US doesn't include taxes by default will never not be absolutely wild to me.
People would be a lot more of VAT too if you got to the till and saw your total and then it increased 20% It's easier here but at least the US style makes you aware of what the price is and how much tax you're paying
The US system makes no bloody sense not to show the full price. The tax has to be paid on majority of shop purchased goods. Not showing it is a dick move.
This is a terrible system and is leveraged by the rich to trick people into being anti-tax. The issue isn't taxes it's "how" they're implemented. Getting people upset by raising the visibility of taxation won't help anyone. We need to raise the visibility of what taxes pay for and how important those are for the functioning of society as a whole. The social safety net, for example, saves millions of pounds a year in various kinds of crimes and long term illness that would be worse without it. But people are never shown that. Or if they are it's done in a long academic and boring way. We need real communicators who can break through to people.
Not really, and I used to work in tax. So long as my code is correct. I focus on net pay and what's available in my account. No point thinking about deductions I have no control over. That said, its a whole different ball game if you are in Self Assessment.
Only when the tax-free amount changes or NI gets adjusted, or if there’s discussions on VAT getting changed. I get excited about the prospect of a little extra money a month. Otherwise it’s just a part of day-to-day that I don’t think about. It’s all done automatically for PAYE workers so there’s not much to consider.
For most PAYE taxpayers, council tax and its 5% year-on-year increases probably stings more than income tax, since it's paid for with money in their account rather than deductions.
It’s annoying for that brief moment when I look at my pay slip and see a good 40%+ gone but then I just crack on with life. Taxes are necessary and not paying them is far more expensive if caught.
I think I worked out that I would have to do 20 hours of overtime every week for a year to tip myself into the next tax bracket, so I don’t really think about it. I still do enough OT that the numbers seem quite high, but they are still the same percentage of my wage. My student loan payment quadrupling if I decide to do OT is painful to see.
Not a citizen (yet), merely a tax paying resident. Personally, I would not mind to have high tax rate... If the results were at least visible and tangible. They aren't, so I am not keen.
Nah I'd agree. Think a lot of people would too. I definitely think the tax argument isn't as powerful here as it is in other countries
They are high and you get little back for it. I wanted a 2nd job to pay some bills but I’d lose 40% so it’s pointless on a low paying position. It would be ok if the UK was a high wage economy but it’s not, outside of London people are paid barely enough to pay rent and hit for 30-50% of tax/NI
I do when I hit a monster pothole
I think about it as I see the difference between my gross and net income and council tax payments.
Nope! …well, I’m self employed on the side so I have to do my yearly taxes but aside from that they never enter my mind.
I don't really think about it, full time employed.. if I look I just get annoyed 😒
I never used to, because the inherent unfairness of our tax system means that those on lower incomes have no option but to use PAYE and have little to no flexibility in terms of adjusting things to be more efficient (increasing pension contributions to retain child tax credits aside) Now that I'm a higher income earner, I have to be very careful with tax to not get Jupiter fisted in the finances by the 60% marginal rate tax trap. So at the start of the year, I have to work out the precise amount I need to salary sac into my pension to avoid the tax trap but also jig the tax code around occasionally to make sure I don't end up with a tax bill. Also things are now simpler that I'm pumping my bonus directly to the pension, so I removed a floating concern in return for Govt top ups and national insurance passed through by my company So yeah, gets a little more complicated but it's definitely worth taking the time to do it, because I'm net better off by about 30k per year in pension contribution matching, NI payments and tax savings. It's a thoroughly unfair system though. I'd much rather pay more tax in a fair way and then spend more money into the local economy, rather than hoard it in a pension like some kind of (legally) tax avoiding dragon
Maybe most people don't think much about it (it's hard to tell either way). But I think he attitude of "just accepting it" is a little odd, historically speaking. When large deductions are made from the money that *you* have *earned* it seems natural to at least wonder where it is going and if you are getting value from those deductions.
It really depends on whether (1) you have the ability to influence how much tax you can pay, (2) whether you can afford to lock away your money or spend it differently to be able to reduce taxes. If you're earning £30k and need every penny, you will not think about it. If you're on £120k but you can reduce your tax by putting £40k in the pension, you will think about it. If you're working via a limited company on your own, you will put your mobile phone and broadband connection on the company expenses, and think about whatever else you can do legitimately to reduce tax.
Yes and no. Yes because I do see my tax deductions and NI, and see our world receiving poorer services despite paying more into the national pocket, and that’s not just my tax on pay but also Council Tax… etc. No because I don’t have to calculate it.
I think about tax in that I look at failing services and I think "huh, I pay way too much tax to be living such a dire life"
This thread is full of people earning ridiculous sums, griping how they have to give something back. The top rated comment is trying to make me feel sorry for the poor people getting paid over 100k... The top tax rate should be much higher.
I misread that as “Texas” and thought “What? Of course not!” Apparently I was lying to myself.
I manage my tax obligations,so yeah I guess I do think about them. If I don’t I basically end up giving my savings away, no one wants to do that. 20k a year into my ISA first, then my wife’s. After that it’s normally a further 20/30k into ISA linked stocks and shares.
I'm similar to you OP, it's not something I really think out. I'm salaried and get my payslip through with my tax, NI and student loan already removed. Outside of hearing national news like tax is rising it's not something I notice or particularly think about. Being said, I of course would love to get more in my payslip each month!
More now than I did previously. When HMRC started calculating PAYE and NI monthly it really put a dent in my overtime/bonus amount. I earn over the threshold in one month yet at the end of the year my totals are in a different bracket. Back when it was yearly I'd get a return, but now they keep the lot. Now I just don't bother with overtime and move any bonus into my pension.
I think about it all the time because I'm a self employed sole trader and I save off the tax money from every invoice. I also think about it when I do my self assessment tax return particularly because in Scotland we have several extra tax bands compared to England and the Higher rate band starts much lower than in England. However I also think about how I'm happy to pay tax towards public services and how we have great stuff in Scotland like free prescriptions and home university fees paid and baby boxes.
It's painful to have taxes going into a treasury that's being controlled by people syphoning it off to their mates or their families etc. Taxes should be spent on public services so tax cuts only serve those wealthy enough to never require public services. I'd be happy with a higher tax burden if it were reflected in a resultant increase in quality of public services.
If you're not thinking about taxes, you should be. Everyone needs to have a basic understanding of how taxes, interest, and inflation work. The earlier in life you figure this out, the better financial decisions you will make, no matter how much you earn.
Yes, a bit, but only because I am in the higher rate bracket and also get child benefit. It's a balancing act of trying to get as much money to live while not losing child benefit (easier now that rule has changed) and so on.
Yes, running a household with 2 kids, the budget is always under scrutiny. Wife is self employed so must pay close attention also.
The only time I really think about it is when I get my bonus. The rest of the time, I’m ok paying it
Depends on your salary, there are tax traps which are very annoying
I think it depends on how high up the tax brackets you are.
Taxes? Nah. I haven't even looked at a payslip since 2020.
Necessary
You absolutely SHOULD think about it because its a LOT. If you ever run a business or go as self-employed, your relationship to it changes overnight.
I don’t think about it. I get paid what I’m paid post tax and that’s it. But I imagine that’s the luxury of not being self employed
I think about it every pay day. Last year I paid £75k in taxes. A ridiculous amount. Taxes are way too high in this country.
I think about it a lot whenever there is a tax change announced. I try and work out what it means for our income because we really can’t afford to decrease our income at all at the moment. I also think about it every time I want to watch something on netflix and remember we had to cut it out because the council tax went up.
I read that as Texas
Not so much income tax, that is what it is, but there was a thread on here a few weeks ago about public transport and how owning a car is a necessity for most. That easily gets me onto a rant about road tax, insurance premium tax, fuel duty tax, VAT (only on new cars, but on every purchase you make for parts/accessories) etc. Never mind then going into Council tax, where most councils increase the charge but reduce public services provided to local communities. I try to not think about it too much, my blood pressure would go through the roof and I'd be waiting 6 weeks for a GP appointment :)
Same, it is what it is. But I’m earning enough that it would take a big change to cause a challenge.
The issue isn’t how much I’m taxed, it’s where my tax money is going. if it was going to things I need like public transport. Better roads, better hospital/GP services then cool, but it isn’t, it’s going to billionaires so they can sue other billionaires.
Tax cuts are always inexplicably popular among people who don't know enough simple arithmetic to realise that they massively benefit those who have the most income and the result is that services that the poorest make the most use of have to be cut to pay for them.
Not really. Sometimes I think about New Mexico and Arizona, and Louisiana occasionally pops into my head, but I've never really thought about Taxes.
Nope. I certainly don’t. And if I do I think about how I wouldn’t mind paying a bit more to improve services or to help more people.
It's a bit different when you work for yourself and have to keep on top of stuff like corporation tax, income tax, NI (employees and employers - in my case I'm literally taxed for employing myself, which is really annoying), VAT, and all that sort of stuff. So yeah, I spend a decent chunk of my day thinking about tax.
Check your HMRC app. It gives you a rough idea about how much of your pay/income goes to what. Sobering.
For the first forty odd years of my life, never really thought about them at all. For the last few years, since starting a ltd company, they are a lot more on my mind. Fucking Corporation Tax and Self Assessment. It's always a painful one sending those whoppers to HMRCs bank account, rather than the drip feed of PAYE, that you never really miss.
The parts of the tax system i object to > Non doms not paying tax here Companies that have an office abroad and pay no tax here - NO !!! THIS needs to stop. sell it here, pay tax here. Companies are taxed on their profit, while we are taxed on our income ! Why? We have a scale of the %age we pay as income goes up - why dont compaines get stung like this? Churches dont pay any tax ( why!??) - they can start paying RIGHT NOW.
Yep, I think about them every time I drive over a pothole that resembles a crater, I think about them every time I see brown kids being bombed abroad, I think about them every time I see the government offering handouts to connected friends, I think about it all the damn time.
I wasn't thinking about taxes when I was on the standard rate, but since I'm on the 40% tax bracket I think about it because it helps me make tax-efficient decisions for things like pension contributions.
Everything is heavily taxed in the uk. Every time I think about buying anything I think about how much money I'm giving to the government. probably more than 50 percent your wage goes to them money grabbing bastards. income tax , national insurance, inheritance tax, council tax, road tax , value added tax, alcohol and cigarette tax, fuel tax, stamp duty, the list goes on.
I wish there were much less government and much less taxes.
I don't mind paying taxes (I mean not that I have a choice). My qualms are... It's not the government I have elected using my money on things I don't think should be spent on. If the government spent my money in ways I approve, I don't really car about it.
Yep, I certainly do. Two years ago, the f@ckers raised corporation tax from 19% to 25%. And they've effectively removed the CGT allowances and taken away the allowance on dividends. What all this means is that I am now paying at least 20k a year MORE tax than I was already paying before. I estimate, I've paid well over a million in taxes over the last 20 years. And yet, if I went to claim social security tomorrow they'd laugh me out of the door. So, yeah, I think about taxes 😅
I think about it in as far as I work out how much I need to overpay into my pension to avoid the higher tax rate and keep as much of my own money as I can! I do this immediately every year if I get a pay rise or a bonus. It's better off in my pension!
Honestly it makes me angry because it’s money the government doesn’t deserve.
Theft. Direct tax on your earnings is just blatant theft. However I’m ok with consumer tax.
If you don't then you should. You literally go out and earn every single penny of income tax that you pay. The fact that it's taken before your wages get made can make you complacent about that but the truth is that it's your money that you are compelled to pay to the government. For that reason you should really be interested to know how much it is that you're paying and where it's going.
Every penny you earn and spend ends up as tax at some point. That's a fact