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There are notoriously large and ordinary income ranges in the UK where significant increases in gross income bring essentially no increase in net income. The am
by jandrewrogers 4y ago
There are notoriously large and ordinary income ranges in the UK where significant increases in gross income bring essentially no increase in net income. The amount of extra income you would need just to clear that gap so that you can realize more net income in so large that it isn't worth the effort.
Naturally people optimize around the fact that there are salary ranges that exhibit no increase in net income. It creates a lot of perverse incentives.
- NoFingerprints 4y agoCan you give an example of these? The only example I can think of is where you loose some child benefits when entering certain income levels. Even when you go above the £100k income the effective tax rate becomes 60% until £125k. You still get 40% of the income?
- tebbers 4y agoWould you bother working if you’re losing more than half of your income before other taxes like VAT kick in?
- orwin 4y agoYes? I mean, i wouldn't work more than 40 hours a week whatever my salary is, but my bonus this year was taxed at 55% and i still would have done the work i did to get it.
- sph 4y agoYour figures are incorrect. At 100k per year your effective tax is a little less than 35%, not 60%. Your net income would be about £65,000. I'm surprised by the amount of tax illiteracy shown in these comments.
- gpderetta 4y agoparent was talking about the marginal tax rate of course, which is what is relevant to the discussion.