Rishi Sunak considers tax cut for top earners after byelection defeats

tintory@lemm.ee to World News@lemmy.world – 156 points –
Rishi Sunak considers tax cut for top earners after byelection defeats
theguardian.com
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£125,140 a year you pay 45% income tax. But it's not quite that simple because you don't pay 45% on everything, just whatever is earned above that and the other thresholds https://www.gov.uk/income-tax-rates

Interesting- compared to my country Germany where you have to pay 42% for everything you earn above (!) 62.810 €

Guess Germany hates its middle class even more than the UK…

In Ireland it’s about 48% on everything above €40k, then 52% above €70k.

That by itself could be misleading though, the overall effective tax rate for someone on €40k is 18%, around 30% at €70k. The thresholds will rise next year.

What is the break down of this? Is it the higher USC band? I'm not familiar with a 52% tax rate.

Yeah after about €70k there is a higher rate of USC. The 52% includes PAYE, PRSI and USC at the highest bands for a regular employee.

Per the article it’s not the top rate he plans to edit but the middle 40% rate which currently starts at £50,270. It’s a little more complex because there is also National Insurance to pay which drops when you hit the 40% tax rate so effectively you go from paying 32% total below £50,270 to 42% above £50,270 (for income above that level). There is a tax free band below £12,570 as well.

I’m simplifying because tax is complicated but roughly that’s how it works. As you move up tax bands you also lose amounts of other allowances like free dividend interest. Above £100k income it gets more complex because even more allowances are removed, especially the tax free band gets reduced.

Depends how you look at it. You lose £1 of PA for every £2 earned over £100k, which is an effective 50% tax rate.

Plus it adds the irritation of having to file a tax return even though you're on PAYE

You also lose £2k worth of tax free childcare instantly as soon as you earn £100k, a rare instance of it actually being possible to earn less money by getting a payrise

It's worth fiddling with your pension contributions to avoid that.

Also I'm not sure how the new childcare policy factors into it. I really need to look into it.