archive.is/20250519211016/https://www.telegraph.co.uk/money/tax/income/high-earners-turn-down-payrises-to-avoid-tax-traps-100k/
I see this seems to have gone up in terms of agendas. Perhaps it's the DT, but martin lewis seems to cover this more often now. No gov seems to want to do much around it though.
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That's not going to apply to me now that I am out of the employment pool.
But it does seem to be unfair that a family of two earners on £99,000 each will get child-minders help but one on £100,000 will not seems to be totally unfair.
The same works for child benefits at a lower level where one earner at £50,000 won't get it but two on £49,000 each will.
There is a hole at £100,000 to about £125,140, when your £12,570 allowance reduces by £1 for every £2 you earn over £100,000.
Isn't it an approximately 60% tax rate in effective terms for that range.
The trick is to get a pay-rise over £125,140 ;-D
Realistically though, if I were in that position I would be maximising my pre-tax deductions like work based, Share Investment Plans, Cycle to Work, salary sacrifice for a car and of course pensions.
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There are several cliff edges in the tax system that mean people are subject to the sudden onset of massive deductions due to the interaction of rate bands and loss of things like child benefit and free childcare.
The issue where two parents can earn within in a £ each of the threshold and retain the advantages for both whereas a single earner goes straight off the cliff edge replicates the silliness a generation ago where unmarried couples both got tax relief on the mortgage.
If Universal Credit can use linking codes to 'marry up' joint claims and treat them appropriately it shouldn't be a massive task to ensure the trap here is removed.
And spare a thought for UC claimants who earn an extra £1 of gross income. They loose 28% in tax and NI leaving them with 72p. That will generate a reduction in UC of all but 40p. They see 32p of every extra £1.
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>>And spare a thought...
I caught a piece on R4 this afternoon about the carers allowance. It is one of those benefits that totally stops once the claimant earns over a certain amount. There is no tapering.
HMRC sent information electronically to DWP regularly when a claimant's earnings exceeded the maximum.
Instead of acting on the information, apparently DWP sat on the info and let claimants continue receiving payments for years. Some reclaims are in excess of £20,000!. How someone who is living on £83 odd a week can repay £20,000 is beyond me.
They are also seeking prosecutions for fraud against claimants.
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The whole lot is ridiculous. I'm lucky(?) enough to fall right into this situation and it's far easier for me to take a leisurely part-time role at work along with the traditional salary sacrifice car and carbon-fibre road bike than it is for me to work full-time.
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>> The whole lot is ridiculous. I'm lucky(?) enough to fall right into this situation and
>> it's far easier for me to take a leisurely part-time role at work along with
>> the traditional salary sacrifice car and carbon-fibre road bike than it is for me to
>> work full-time.
Would you actually be worse off or is it more a work/life balance thing where the net pay for full time isn't worth the ag in what is obviously a responsible and exacting job?
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>>actually worse off...
FF's situation may be different, but AIUI, some employees can be worse off, because they lose the child nursery allowances, or what ever they are called. It's a cliff-edge. So I guess it's going to impact younger high earners most.
Last edited by: zippy on Thu 22 May 25 at 18:07
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So why should younger higher earners get a nursery allowance?
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>> So why should younger higher earners get a nursery allowance?
>>
More likely to have nursery age kiddies.
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So why do these higher earners actually need subsidising?
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>> So why do these higher earners actually need subsidising?
At what age do you think the state should pay for education?
Was the rising 5 of our era the right point?
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>At what age do you think the state should pay for education?
Children or parents?
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>> So why do these higher earners actually need subsidising?
>>
They probably don't, but it does seem inequitable, that earning just £1 more can lead to taking home several thousands less.
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>> So why should younger higher earners get a nursery allowance?
>>
Why should anyone get a nursery allowance ?
Or child benefit?
You want children, you pay for them.
And don’t get me started on free buses to schools…if you want to live out in the sticks then getting your children to school is your problem, not the local council providing taxis at great expense ( great for Skipton taxis taking kids to school in Settle)
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>> >> So why should younger higher earners get a nursery allowance?
>> >>
>> Why should anyone get a nursery allowance ?
>> Or child benefit?
>> You want children, you pay for them.
>> And don’t get me started on free buses to schools…if you want to live out
>> in the sticks then getting your children to school is your problem, not the local
>> council providing taxis at great expense ( great for Skipton taxis taking kids to school
>> in Settle)
>>
I guess it's to encourage procreation - we need more of them to pay our pensions for us.
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>> >> So why should younger higher earners get a nursery allowance?
>> >>
>> Why should anyone get a nursery allowance ?
>> Or child benefit?
>> You want children, you pay for them.
>> And don’t get me started on free buses to schools…if you want to live out
>> in the sticks then getting your children to school is your problem, not the local
>> council providing taxis at great expense ( great for Skipton taxis taking kids to school
>> in Settle)
>>
Makes sense to support people to have. There's a reason practically every developed country does similar.
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A good case can made for all of those things for those for whom it is a struggle to make ends meet. It was subsidising those on a decent salary that I find odd. A bit like the heating allowance
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CGN, yes in broad terms, but what seems unfair is the sudden cut off without tapering so that you get these odd tax / total take home reductions. I have some sympathy in these cases for £100k earners on a scale it's 1 from 10. It would be nice to resolve it, but there are much more important things to be done.
One of the most egregious is the aforementioned carers allowance. Those who need it are likely to really need it. Earn 1 penny above a set limit the whole 80 quid of the allowance is gone. No tapering. So earn a penny, be 80 quid poorer. Totally unfair. The scale here is 10/10. This really should be reviewed and corrected if possible.
Last edited by: zippy on Thu 22 May 25 at 22:39
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The tax and benefits system across the economic spectrum is broken. Cliff edges encourage perverse behaviours making very high marginal tax rates more likely.
UK tax legislation is hugely complex covering over 20,000 pages. It has been added to piecemeal for decades (or more) influenced by short term political and economic expediency unencumbered by strategy. It is a mess.
Single issues are scarcely worth worrying about - nursery school fees, winter fuel allowances, TV licences, etc. Some allowances are taxable, some not, adding to complexity not equity. Far better that:
- all income is taxable
- cliff edges removed entirely
- personal allowance and tax thresholds and rates adjusted to reflect the socially equitable
I look forward (more in hope than expectation) to a government (of any colour) which has the courage to make these changes.
The present debate over a possible winter fuel allowance U-turn is symptomatic:
- changing a policy which when announced was irreversible - evidences a lack of strategy
- flawed by linking it to pension credit receipts - a cliff edge
- unnecessary administrative complexity
Alternative - add the allowance to pension payments which are then taxed. Low incomes pay no tax, moderate incomes pay 20% , high incomes 40%. Equitable and simple.
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>>Alternative - add the allowance to pension payments which are then taxed. Low incomes pay no
>>tax, moderate incomes pay 20% , high incomes 40%. Equitable and simple.
Don't be silly. That's far too simple ;-D
(Darn good idea though - I wish I'd thought of that.)
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My wife turns 80 in 3 weeks time - her State Pension gets a raise of
Drum Roll
25p per week
Introduced 54 years ago to supplement the State pension of £6.70 - so roughly 2 weeks extra pension in the year. The 25p was never increased.
PS
In just over a year's time I too will get the extra 25p - combined a full year's of 25p's would give us around 4 gallons of petrol Once per year!!
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In just over a year's time I too will get the extra 25p - combined a full year's of 25p's would give us around 4 gallons of petrol Once per year!!“
It gives me enough cheap electricity to drive around 700 miles though :-)
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>> In just over a year's time I too will get the extra 25p - combined
>> a full year's of 25p's would give us around 4 gallons of petrol Once per
>> year!!“
>>
>> It gives me enough cheap electricity to drive around 700 miles though :-)
>>
In 1970 - 54 years ago petrol was 33p a gallon. Back then unbridled government generosity would have enabled two aged pensioners to afford ~6 gallons extra fuel a month - if they had a car.
In 1970 few pensioners would have had a car. For those over 70, few women even had a driving licence, and only about 30% of men.
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>> My wife turns 80 in 3 weeks time -
>> In just over a year's time I too will get the extra 25p - combined
>> a full year's of 25p's would give us around 4 gallons of petrol Once per
>> year!!
FB - you're a TOYBOY - clearly marrying a richer older lady ;-)
(So am I :-D )
The 25p is an insult.
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“The 25p is an insult”
No it isn’t. It’s just a benefit left over from an earlier age that nobody wants to abolish for fear of negative tabloid headlines. Similar to reason we don’t abolish our copper coins that nobody uses any more.
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>> No it isn’t. It’s just a benefit left over from an earlier age that nobody
>> wants to abolish for fear of negative tabloid headlines. Similar to reason we don’t abolish
>> our copper coins that nobody uses any more.
That. Exactly.
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>> >> No it isn’t. It’s just a benefit left over from an earlier age that
>> nobody
>> >> wants to abolish for fear of negative tabloid headlines. Similar to reason we don’t
>> abolish
>> >> our copper coins that nobody uses any more.
>>
>> That. Exactly.
>>
Surely if they wanted to give the equivalent to an extra week or two's income when someone reached 80, they should have increased the 25p in line with inflation or average wages.
It was clearly originally given because of a perceived need. Has that need gone away? - I doubt it.
The fact that they they haven't increased the allowance suggests that those in power don't really give 2Fs about the ageing population and rather than thinking they are too frightened of the press to kill it off, there should be protests to get it to rise, but 80 year old OAPs rarely protest.
Last edited by: zippy on Fri 23 May 25 at 18:31
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It’s been 25p or 5/- since 1971. A bit late to start a campaign.
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>>
>>
>> No it isn’t. It’s just a benefit left over from an earlier age that nobody
>> wants to abolish for fear of negative tabloid headlines. Similar to reason we don’t abolish
>> our copper coins that nobody uses any more.
>>
It's the same with the £10 Christmas bonus. Virtually everyone who receives it think it's a joke, but you can just imagine the screaming headlines in the Mail and Sun if Labour abolished it, or in the Mirror if the Tories did.
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. Similar to reason we don’t abolish
>> our copper coins that nobody uses any more.
>>
My local shops do. Next time your bill is £6.03 and you pay cash, as I do for anything under a tenner * tell them to round it down :-)
I spent many years in retail as a shop owner and my staff were instructed to forget anything under 10p if customers were paying cash , whether it was £2.07 or £4.09.
* reason I pay cash on purchases under a tenner is because I check my credit card statements.
Saves time checking the monthly statement.
Many don’t.
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>> A good case can made for all of those things for those for whom it
>> is a struggle to make ends meet. It was subsidising those on a decent salary
>> that I find odd. A bit like the heating allowance
>>
Like everything its where you draw the line. Depends on what as a gov you're trying to achieve and whatever the definition of a good salary.
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>> if you want to live out
>> in the sticks then getting your children to school is your problem, not the local
>> council
Hmm, in some places maybe.
Round here in Northamptonshire we have large rural comprehensives in half a dozen or so larger villages. Kids from around, and on this edge of the town itself, are bussed in in hundreds.
It was set up that way in the sixties/seventies when a number of villages expanded from a few hundred people to 2-3,000.
Been like that ever since.
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>>
>> And don’t get me started on free buses to schools…if you want to live out
>> in the sticks then getting your children to school is your problem, not the local
>> council providing taxis at great expense ( great for Skipton taxis taking kids to school
>> in Settle)
>>
And what if you were born out in the sticks, like most of the people who live there? Perhaps you should sell your little stone cottage and buy a house in London or Essex?
Great idea but I can see a slight problem...
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>> And what if you were born out in the sticks, like most of the people
>> who live there?
Indeed.
Had words with somebody years ago where we were looking at the location of hearing centres for DWP related tribunals.
Somebody said what about people who live on the Outer Hebrides where even getting to Stornoway (the main town) is a trek.
According to one vocal participant, a guy being paid as a consultant FFS, that was their fault for living there and they'd have to take a plane to Inverness or Glasgow!!
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>>According to one vocal participant, a guy being paid as a consultant FFS, that was their fault for
>>living there and they'd have to take a plane to Inverness or Glasgow!!
I always thought that if you pay the same taxes (though perhaps not in absolute terms), then you should get broadly similar access to the same services or help if you are far away.
That can't always be possible. You can't build a hospital or secondary modern for every village, but you can build hubs, say a central secondary school in the largest local village and provide buses for outlying students, after all, their parents pay in to the tax pool that builds schools, so should have equal access.
Locally there are regular discussions on closing one of the local district general hospitals across 3 towns. The town in the middle lost their A&E dept in the late 1970s and now deals with limited conditions only and outlying cottage hospitals closed around the same time.
The two remaining hospitals general hospitals are 20miles and about 50 minutes apart, more at rush hour and both serve large catchment areas.
It would be very unfair to close one of the hospitals and savings would be limited - probably a benefit of developing the redundant site for housing. You would need similar numbers of nurses, doctors etc. to deal with the same number of patients, if not more, because reluctant or delayed patients would likely need longer care.
Both hospitals (one from the 70s and one from the 80s) are at the end of their design lives and need expensive work.
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Tax take - zippy
