DISQUS

justingsouter · 8 months ago

<sigh>

I would love to earn £100k, maybe in future!

However, I despair at this administration but I guess I'm more worried that the Electorate can't see through this lot & keep voting for them. Bah.

btw, link was from Iain Dale's site - top blogging mate!

Simon · 8 months ago

Yes, you are correct - the marginal rate will be 60% on the £13k or so of income just above the £100k threshold. Actually, it will be 61% once national insurance is included, rising to 61.5% from April 2011.

Once you've included employer national insurance (assuming the individual is an employee rather than self-employed), the government will end up getting £1.89 for every £1 of that net income the individual is left with. From April 2011, that will be £1.94. Horrifying.

Alex · 8 months ago

"What I am not clear about is whether the ending of the personal allowance lowers the rate at which higher rate tax payers enter the higher band or whether it is at the same overall level - i.e. that they pay the basic rate for longer"

I would have thought it was quite straight forward. Your taxable income is calculated excluding all allowances, then the allowances (or reduced allowances) are deducted and then tax is calculated on the net liability at the basic rate and if appropriate higher rate. The only confousion I see is what figure is used to determine the taxable base for the personal allowance calculation. If it is all income less all allowances (except for the perosonal allowance) then that makes sense, but if they start pulling the same stunt on other items it is going to get complicated

Major Plonquer · 8 months ago

This is all very true. Unless, of course you happen to also pay the 11% National Insurance. Or if you are an entrepreneur, employ people and pay their salaries then you'll also have to pay the employer's contribution. Total is 73% by my calculation.

But Hell, who cares? We employers are all so rich that this is just an annoyance to us. We have to pay our 'fair share' I'm told, I'm also told that a quick call to the accountant will fix it, right?

Australia looks better every day.

James Dunlop · 8 months ago

The 60% is before you add in National Insurance, which is just another tax. The marginal rates are 12.8% employer's Ni and 1% employee's NI. Looking, for those suffering a 60% tax due to allowance withdrawal, at the combined marginal rate of Tax and NI:

Now: A company must spend £112.80 to put £59 into the pocket = 52% retained, 48% tax & NI

From 2010: A company must spend £112.80 to put £39 into the pocket =34% retained, 66% tax & NI

Chalcedon · 8 months ago

You also have to factor in National Insurance, which is also an income tax.

danvers · 8 months ago

Thanks for all the comments and for the huge spike in visitors to this blog (mainly thanks to Iain Dale).

Justin - Yes, but you save a fortune living oop north (and I look forward to seeing you in Geordieland next month).

Everyone else - on the National Insurance point - absolutely it comes out of income but only if (like most people) you earn through paid employment. If you are taking dividend, interest or other income, you don't pay it - which is even more inequitable in my view. Arguably "unearned" income should be taxed more heavily, and/or there should be more tax breaks for employing people, particularly in these difficult times.