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Slightly OT: "Tax rates are so high that a 20% pay cut would be a much smaller real terms pay decrease." This is about the difference between your marginal ta
by rahimnathwani 4y ago
Slightly OT:
"Tax rates are so high that a 20% pay cut would be a much smaller real terms pay decrease."
This is about the difference between your marginal tax rate and your average tax rate (and the progressive tax bands that cause the difference), not about tax rates being high.
If income tax rates were 90% at all income levels, this would be high, but a 20% cut in gross income would result in a 20% cut in net income.
- alexfoo 4y agoThere's a slight noticeable effect of tax-free allowances (or 0% band if you think of it that way). UK £100k gross income = £66,692.76 take home UK £80k gross income = £55,092.76 take home So that's a 20% cut in gross income for a 17.4% cut in net income. Put it another way, you're £1,738.55 better off than a flat 20% cut in net income. https://listentotaxman.com/?year=2021&taxregion=uk&married=true&marriageallowance=true&age=0&time=1&ingr=100000 https://listentotaxman.com/?year=2021&taxregion=uk&married=t... https://listentotaxman.com/?year=2021&taxregion=uk&married=true&marriageallowance=true&age=0&time=1&ingr=80000 https://listentotaxman.com/?year=2021&taxregion=uk&married=t...