4 ms·

None of this sounds new to me, even if I lived in London for just four months. But the post made me curious about tax brackets in the UK. So... perhaps this is

None of this sounds new to me, even if I lived in London for just four months. But the post made me curious about tax brackets in the UK. So... perhaps this is partially OT, but: according to a couple sources [1,2], income tax at £50k/year is just 17-18%, and National Insurance another 9%. This makes the total "tax bracket" around 27%. Even if the author means that 50k is his net salary, the same sources put the tax bracket at just 32% [3]. Why does the author say his tax bracket is around 40%? Are those sources unreliable? Are they missing some of the taxes? [1]: http://www.netsalarycalculator.co.uk/50000-after-tax/ http://www.netsalarycalculator.co.uk/50000-after-tax/ [2]: https://www.incometaxcalculator.org.uk/?ingr=50000 https://www.incometaxcalculator.org.uk/?ingr=50000 [3]: http://www.netsalarycalculator.co.uk/74000-after-tax/ http://www.netsalarycalculator.co.uk/74000-after-tax/

joefreeman 9y ago
He means that tax on any additional income over £50k (actually, over £45k) is taxed at 40%.
djhworld 9y ago
UK income tax is banded, when people from the UK say they're in the 40% tax bracket they're just referring to what band they're in https://www.gov.uk/income-tax-rates/current-rates-and-allowances https://www.gov.uk/income-tax-rates/current-rates-and-allowa...
refrigerator 9y ago
In the UK when people talk about "tax bracket", they don't usually mean "overall tax rate on total income", but rather, specifically which of the following bands you fall into: [1]. The fact that the author is in the 40% tax bracket means that any money he makes above £45k is taxed at 40%. I can imagine to an outsider this seems like a bit of an unintuitive way to frame things :) [1]: https://www.gov.uk/income-tax-rates/current-rates-and-allowances https://www.gov.uk/income-tax-rates/current-rates-and-allowa...
ed_balls 9y ago
If you make 50k your effective income tax + NI tax is about 33%. If you take other taxes (council tax, VAT, stamp duty etc.) Total effective taxation is around 50%. Now the dividend tax is 15% (in the best case scenario you can always try funnelling money through Man Island or other tax heaven). There is no land tax and estate tax.
- aries1980 9y ago
  Divident tax is after you paid 20% corporate tax. At the end you probably save the NI, but you have many other charges (accounting, time spent on paperwork, business rates, etc.)

joefreeman 9y ago

He means that tax on any additional income over £50k (actually, over £45k) is taxed at 40%.

djhworld 9y ago

UK income tax is banded, when people from the UK say they're in the 40% tax bracket they're just referring to what band they're in https://www.gov.uk/income-tax-rates/current-rates-and-allowances https://www.gov.uk/income-tax-rates/current-rates-and-allowa...

refrigerator 9y ago

In the UK when people talk about "tax bracket", they don't usually mean "overall tax rate on total income", but rather, specifically which of the following bands you fall into: [1]. The fact that the author is in the 40% tax bracket means that any money he makes above £45k is taxed at 40%. I can imagine to an outsider this seems like a bit of an unintuitive way to frame things :) [1]: https://www.gov.uk/income-tax-rates/current-rates-and-allowances https://www.gov.uk/income-tax-rates/current-rates-and-allowa...

ed_balls 9y ago

If you make 50k your effective income tax + NI tax is about 33%. If you take other taxes (council tax, VAT, stamp duty etc.) Total effective taxation is around 50%. Now the dividend tax is 15% (in the best case scenario you can always try funnelling money through Man Island or other tax heaven). There is no land tax and estate tax.

aries1980 9y ago
Divident tax is after you paid 20% corporate tax. At the end you probably save the NI, but you have many other charges (accounting, time spent on paperwork, business rates, etc.)