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It looks like the highest tax bracket in the UK is at 45% and starts above 150k GBP. On 150k GBP you would pay max 40%. Buuut let's say you make 200k,then some

It looks like the highest tax bracket in the UK is at 45% and starts above 150k GBP. On 150k GBP you would pay max 40%. Buuut let's say you make 200k,then some falls into the 45 bracket. £83,934 taxes or an average tax rate of about 41.9%

mmarq 4y ago
Between 100K and 125K, you progressively lose the tax allowance, bringing your marginal income tax rate to 60%.
- tharkun__ 4y ago
  I didn't just dream this up. I literally just Googled a tax calculator and input 100k, 150k and 200k.
  - xanthrax 4y ago
    And your using out of date information. The upper tax bracket has been lowered to 125K and you also lose your personal allowance of 12.5K which is tax free, so you start paying tax on earning you didn't have to before.
    - tharkun__ 4y ago
      Fair enough, that is possible. Maybe that calculator was outdated. Do you have a pointer? Until then, I googled again and using this now, which should of course be up-to-date, shouldn't it (tax year 2022): https://www.tax.service.gov.uk/estimate-paye-take-home-pay https://www.tax.service.gov.uk/estimate-paye-take-home-pay Entering 150k, the result is Your estimated take-home pay for 2022 is £96,053 a year or in other words a 35.9% average tax rate. It even specifically says on the bottom: Your tax-free allowance is £12,570
      - timthorn 4y ago
        Mmarq is correct: https://www.gov.uk/income-tax-rates/income-over-100000 https://www.gov.uk/income-tax-rates/income-over-100000
      - jlokier 4y ago
        That gov.uk calculator is incorrect, which is unusual for gov.uk. It hasn't reduced the tax-free allowance to zero as it should for £150k. Most other online tax calculators do, so they show a lower take home amount. The 60% that is discussed is the marginal rate in the band from £100k to £125k, not the average tax rate on all the income. It means: for each increase of £1000 in your earnings when your income is in that band, you pay £600 more tax.
        tharkun__ 4y ago
        I understand how tax brackets work and what a marginal rate is ;) The original post I replied to first however does not seem to be aware of it. To quote the relevant part again: their ass to break 100k when they're getting a 60% tax bill. No, you do not get taxed 60% once you reach 100k in income, not even in the UK, not even under the new rules that even the government's own calculator does not take into account ;) That is specifically why I quoted the average tax rate too and not just the marginal rate. Now of course, w/ the reduction of the tax free amount at those incomes coming into effect, yes, in comparison to some other countries (and apparently previous rules), you do get taxed quite high. Now let's compare. 100k GBP ~= 166k CAD Canada, cheapest province - Alberta. Average tax rate ~31%, marginal tax rate ~42% Canada, expensive province - Quebec. Average tax rate ~38.5%, marginal tax rate ~50% 150k GBP ~= 250k CAD Canada, cheapest province - Alberta. Average tax rate 35.4%, marginal tax rate 47% Canada, expensive province - Quebec. Average tax rate 42.8%, marginal tax rate 53.3% The only rate that really matters for what you have in your pocket in the end is the average tax rate. You could have a country with a 99% marginal tax rate in the highest bracket but a bracketing system in which 99% of the population never reach that bracket, so quoting the marginal rate is not very helpful except if you want to complain about taxes - or you make the 150 million at which that marginal rate might apply in this fictitious country ;) While we're at comparing, Germany, a country with high taxes that 150k GBP is about 170k EUR and results in an effective tax of 43%. Since apparently the government calculator is wrong for the UK and I only find broken ones myself, can you calculate the above w/ one that does things correctly and post for comparison?
  - CommanderData 4y ago
    Please get your facts in order. You'll be taxed 60% of your income like others have said if you earn inside a certain bracket. To add insult to injury the government also collects taxes on purchases. VAT.
simmerup 4y ago
Starting at 100k you lose your personal allowance which places you in an effective 60% tax rate. Most people start avoiding having a take home pay of over 100k for this reason unless they’re in one of the few jobs where they earn far and above over 120~k.
JonChesterfield 4y ago
The other replies have noted the personal allowance disappearing. There's also a student loan system designed to tax graduates in perpetuity (10% ish) though those who make it to 100 will probably clear it eventually. And there's a 'national insurance' tax which is 13% paid by employer before even getting to your gross pay, primarily so that the tax levels look less horrendous. That's extra to the identically named 'national insurance' tax paid by employees, though that at least drops to 2% past some threshold. 100 is also the cut-off point for a weird scheme described at https://www.gov.uk/30-hours-free-childcare https://www.gov.uk/30-hours-free-childcare which seems to be £2k per child for a couple of years. So if you're a graduate looking at making it past 100 with a kid in that bracket, marginal rate of 71% (40 income, 2 national insurance, 9 student loan, 20 personal allowance disappearing), to catch that 2k loss you have to get up to about £107k. There might be other similar schemes that I haven't heard of. And that's before we start looking at other taxes, of which stamp duty is easily the one that annoys me the most but fuel duty probably the most expensive day to day. Pretty sure I've forgotten some too. The almost mandatory pension contribution that I expect to disappear in smoke at some point is a similar thing. Sadly the up front number of 20% income tax is the one people hold onto while saying the UK is a low tax country. Even when their paycheck says something different.

mmarq 4y ago

Between 100K and 125K, you progressively lose the tax allowance, bringing your marginal income tax rate to 60%.

tharkun__ 4y ago
I didn't just dream this up. I literally just Googled a tax calculator and input 100k, 150k and 200k.
- xanthrax 4y ago
  And your using out of date information. The upper tax bracket has been lowered to 125K and you also lose your personal allowance of 12.5K which is tax free, so you start paying tax on earning you didn't have to before.
  - tharkun__ 4y ago
    Fair enough, that is possible. Maybe that calculator was outdated. Do you have a pointer? Until then, I googled again and using this now, which should of course be up-to-date, shouldn't it (tax year 2022): https://www.tax.service.gov.uk/estimate-paye-take-home-pay https://www.tax.service.gov.uk/estimate-paye-take-home-pay Entering 150k, the result is Your estimated take-home pay for 2022 is £96,053 a year or in other words a 35.9% average tax rate. It even specifically says on the bottom: Your tax-free allowance is £12,570
    - timthorn 4y ago
      Mmarq is correct: https://www.gov.uk/income-tax-rates/income-over-100000 https://www.gov.uk/income-tax-rates/income-over-100000
    - jlokier 4y ago
      That gov.uk calculator is incorrect, which is unusual for gov.uk. It hasn't reduced the tax-free allowance to zero as it should for £150k. Most other online tax calculators do, so they show a lower take home amount. The 60% that is discussed is the marginal rate in the band from £100k to £125k, not the average tax rate on all the income. It means: for each increase of £1000 in your earnings when your income is in that band, you pay £600 more tax.
      - tharkun__ 4y ago
        I understand how tax brackets work and what a marginal rate is ;) The original post I replied to first however does not seem to be aware of it. To quote the relevant part again: their ass to break 100k when they're getting a 60% tax bill. No, you do not get taxed 60% once you reach 100k in income, not even in the UK, not even under the new rules that even the government's own calculator does not take into account ;) That is specifically why I quoted the average tax rate too and not just the marginal rate. Now of course, w/ the reduction of the tax free amount at those incomes coming into effect, yes, in comparison to some other countries (and apparently previous rules), you do get taxed quite high. Now let's compare. 100k GBP ~= 166k CAD Canada, cheapest province - Alberta. Average tax rate ~31%, marginal tax rate ~42% Canada, expensive province - Quebec. Average tax rate ~38.5%, marginal tax rate ~50% 150k GBP ~= 250k CAD Canada, cheapest province - Alberta. Average tax rate 35.4%, marginal tax rate 47% Canada, expensive province - Quebec. Average tax rate 42.8%, marginal tax rate 53.3% The only rate that really matters for what you have in your pocket in the end is the average tax rate. You could have a country with a 99% marginal tax rate in the highest bracket but a bracketing system in which 99% of the population never reach that bracket, so quoting the marginal rate is not very helpful except if you want to complain about taxes - or you make the 150 million at which that marginal rate might apply in this fictitious country ;) While we're at comparing, Germany, a country with high taxes that 150k GBP is about 170k EUR and results in an effective tax of 43%. Since apparently the government calculator is wrong for the UK and I only find broken ones myself, can you calculate the above w/ one that does things correctly and post for comparison?
- CommanderData 4y ago
  Please get your facts in order. You'll be taxed 60% of your income like others have said if you earn inside a certain bracket. To add insult to injury the government also collects taxes on purchases. VAT.

simmerup 4y ago

Starting at 100k you lose your personal allowance which places you in an effective 60% tax rate. Most people start avoiding having a take home pay of over 100k for this reason unless they’re in one of the few jobs where they earn far and above over 120~k.

JonChesterfield 4y ago

The other replies have noted the personal allowance disappearing. There's also a student loan system designed to tax graduates in perpetuity (10% ish) though those who make it to 100 will probably clear it eventually. And there's a 'national insurance' tax which is 13% paid by employer before even getting to your gross pay, primarily so that the tax levels look less horrendous. That's extra to the identically named 'national insurance' tax paid by employees, though that at least drops to 2% past some threshold. 100 is also the cut-off point for a weird scheme described at https://www.gov.uk/30-hours-free-childcare https://www.gov.uk/30-hours-free-childcare which seems to be £2k per child for a couple of years. So if you're a graduate looking at making it past 100 with a kid in that bracket, marginal rate of 71% (40 income, 2 national insurance, 9 student loan, 20 personal allowance disappearing), to catch that 2k loss you have to get up to about £107k. There might be other similar schemes that I haven't heard of. And that's before we start looking at other taxes, of which stamp duty is easily the one that annoys me the most but fuel duty probably the most expensive day to day. Pretty sure I've forgotten some too. The almost mandatory pension contribution that I expect to disappear in smoke at some point is a similar thing. Sadly the up front number of 20% income tax is the one people hold onto while saying the UK is a low tax country. Even when their paycheck says something different.