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Between £100k and £125k your personal allowance is reduced to £0, so for every £1 you gain, you lose more of that allowance and that works out to a 20% reductio
by tikkabhuna 4y ago
Between £100k and £125k your personal allowance is reduced to £0, so for every £1 you gain, you lose more of that allowance and that works out to a 20% reduction. That on top of the 40% rate equals 60%.
- wave_function 4y agoIf I’m understanding correctly, that makes the effective marginal tax rate between 100k and 125k higher than after 125k? Feels kind of crazy
- MattPalmer1086 4y agoThat's correct. Most people in the UK have no idea that there is an effective 60% tax rate either. It's not an official tax band. But it's the kind of tax raising governments love doing, by stealth. Don't put up the tax band thresholds causing more people to fall into the higher bands over time. They also remove child tax credit as you earn more. And remove your personal tax allowance gradually over 100k.
- dan-robertson 4y ago> And remove your personal tax allowance gradually over 100k. Well the that’s the thing this thread is all about so that isn’t an additional thing.
- MattPalmer1086 4y agoYeah, bad phrasing! I'm sure there are other examples of stealth taxation.