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In the UK, once you reach £100k they tax you at the 40% rate plus begin removing the tax-free allowance. Giving you an effective tax rate of 60% up to about £12
by cs02rm0 8y ago
In the UK, once you reach £100k they tax you at the 40% rate plus begin removing the tax-free allowance. Giving you an effective tax rate of 60% up to about £121k. That's on top of the 20% VAT and 20% corporation tax paid out by the company. And employer's/employee's national insurance. And the VAT on any goods you buy with the earned money and fuel duty if it's petrol.
I'm a contractor so I can choose to stop earning at that point - and I do. If other people are taking the same philosophy I'd imagine they're losing quite a lot of money.
- scaphandre 8y agoYou can't sum the marginal rate to get the 'effective rate'. The effective rate of income tax in the UK is closer 37%, not 60%, at an income of £121k. https://en.wikipedia.org/wiki/File:Percentage_IT_and_NI_and_Marginal_Taxrate.png https://en.wikipedia.org/wiki/File:Percentage_IT_and_NI_and_...
- komodosquirrel 8y agoYou get 61.2% but there is hidden about 12% of tax that employer has to pay on top of that. It is insane.
- cs02rm0 8y agoUgh. I meant marginal.