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In the UK once you reach over ~120k GBP the total tax wedge is above 50% [1]. At 90k GBP you are paying 45%. I guess it depends on what “nowhere near half” mea

In the UK once you reach over ~120k GBP the total tax wedge is above 50% [1]. At 90k GBP you are paying 45%. I guess it depends on what “nowhere near half” means. 45% is close imo. Especially with VAT added in on purchases. Yes the average London wage is more like 50k GBP, but from that perspective it’s also only double the average wage before you hit 45%+ tax take. The top UK tax rate (including employers NI etc) is ~59%. 1. https://listentotaxman.com/?year=2022&taxregion=uk&age=0&time=1&ingr=120000 https://listentotaxman.com/?year=2022&taxregion=uk&age=0&tim...

avianlyric 3y ago
Less than 1% of the UK population earns above £120k. It think GPs qualifier: > for more than small minorities of the population. covers that situation. Simply put, only a small minority of people in the UK pay that much tax. Not to mention the classic error you’ve made > hit 45%+ tax take. that tax take only applies to persons income that’s above 120k. The actual total tax burden across their income is substantially lower, given everything below £120k is taxed at a much lower rate.
- yardstick 3y ago
  > Not to mention the classic error you’ve made Actually I didn’t error. This is the total tax paid expressed as a percentage. It is not the marginal tax rate. See the link I provided as evidence (add total deductions + employers NI together).
  - avianlyric 3y ago
    > add total deductions + employers NI together Why would anyone do this? Employers NI is a business tax, why would consider that a tax paid by individuals? If you’re gonna start attributing employer taxes to individuals, then why not start including business rates and other random taxes, then you can gin up any level tax burden you want.
    - yardstick 3y ago
      It’s a direct tax on your employment, and if you are self employed then you also have to pay it. Likewise if you have options/shares as part of remuneration it is often specified that the employee pays the employers NI for it. Honestly it’s just a cheeky way for the govt to hide income taxes. Why not include business rates? Because it’s not linked to the employees salary. It doesn’t change based on the employees salary.
    - sokoloff 3y ago
      It’s value that you created for your employer by your work and that you didn’t receive after taxation. The fact that it was taxed above some line rather than below it doesn’t matter. (Of course that means it needs to be added to both the numerator and denominator when calculating the total tax burden, something that is often skipped.)
      - vidarh 3y ago
        By that argument you might as well add VAT paid by your employers customer as well. It's a specious argument, because these amounts are not part of what you negotiate or put in your contract, and when these rates change your employer is on the hook for them, not you. It further only tend to be included when complaining about high tax countries, and conveniently forgotten when people compare w/e.g. US taxation. Nevertheless, even with them included, only a few European countries have total tax wedges above 50% for more than small portions of the population.
        sokoloff 3y ago
        > By that argument you might as well add VAT paid by your employers customer as well. If you make money by your labor hours directly being billed and the buyer of those hours pays VAT on that labor, then I agree. So long as there’s a direct and 100% link between your labor and the taxed amount, it’s value you created and was taxed away, without regard to who stroked the check to the tax authorities.
        3y ago
tonyedgecombe 3y ago
>At 90k GBP you are paying 45%. This is so misleading. At £90K you get a £12,579 tax free allowance leaving £77,421 taxable. You will pay £7,540 from the 20% band, £15,888.40 from the 40% band and nothing from the 45% band for a total of £23,428.40. National Insurance will be £5,318.60 making the total deduction £28,747. So approx 32%.
- yardstick 3y ago
  You forgot the additional 13% in employers NI. Edit: which yes takes it to 43% not the 45% I originally wrote. Now enjoy paying another 20% VAT on any goods and services
  - consilient 3y ago
    > You forgot the additional 13% in employers NI. Only the part of that that would actually be passed through to you as salary in the absence of the tax could reasonably be considered part of your tax burden. Hard to say how much that is without any information about your field or employer, but I guarantee it's less than 100%.
vidarh 3y ago
Even when considering total tax wedge, which is not what most people consider "their" tax (note total deductions from your contracted salary is 38% at 120k salary; the total cost to your employer is ~136k because of the employer contributions), only a tiny minority pays that much. E.g. 120k places you in top 2% or thereabout. The average UK salary is <35k GBP. At that level total deductions are 20%, and your employer pays 10% employer NI.

avianlyric 3y ago

Less than 1% of the UK population earns above £120k. It think GPs qualifier: > for more than small minorities of the population. covers that situation. Simply put, only a small minority of people in the UK pay that much tax. Not to mention the classic error you’ve made > hit 45%+ tax take. that tax take only applies to persons income that’s above 120k. The actual total tax burden across their income is substantially lower, given everything below £120k is taxed at a much lower rate.

yardstick 3y ago
> Not to mention the classic error you’ve made Actually I didn’t error. This is the total tax paid expressed as a percentage. It is not the marginal tax rate. See the link I provided as evidence (add total deductions + employers NI together).
- avianlyric 3y ago
  > add total deductions + employers NI together Why would anyone do this? Employers NI is a business tax, why would consider that a tax paid by individuals? If you’re gonna start attributing employer taxes to individuals, then why not start including business rates and other random taxes, then you can gin up any level tax burden you want.
  - yardstick 3y ago
    It’s a direct tax on your employment, and if you are self employed then you also have to pay it. Likewise if you have options/shares as part of remuneration it is often specified that the employee pays the employers NI for it. Honestly it’s just a cheeky way for the govt to hide income taxes. Why not include business rates? Because it’s not linked to the employees salary. It doesn’t change based on the employees salary.
  - sokoloff 3y ago
    It’s value that you created for your employer by your work and that you didn’t receive after taxation. The fact that it was taxed above some line rather than below it doesn’t matter. (Of course that means it needs to be added to both the numerator and denominator when calculating the total tax burden, something that is often skipped.)
    - vidarh 3y ago
      By that argument you might as well add VAT paid by your employers customer as well. It's a specious argument, because these amounts are not part of what you negotiate or put in your contract, and when these rates change your employer is on the hook for them, not you. It further only tend to be included when complaining about high tax countries, and conveniently forgotten when people compare w/e.g. US taxation. Nevertheless, even with them included, only a few European countries have total tax wedges above 50% for more than small portions of the population.
      - sokoloff 3y ago
        > By that argument you might as well add VAT paid by your employers customer as well. If you make money by your labor hours directly being billed and the buyer of those hours pays VAT on that labor, then I agree. So long as there’s a direct and 100% link between your labor and the taxed amount, it’s value you created and was taxed away, without regard to who stroked the check to the tax authorities.
        3y ago

tonyedgecombe 3y ago

>At 90k GBP you are paying 45%. This is so misleading. At £90K you get a £12,579 tax free allowance leaving £77,421 taxable. You will pay £7,540 from the 20% band, £15,888.40 from the 40% band and nothing from the 45% band for a total of £23,428.40. National Insurance will be £5,318.60 making the total deduction £28,747. So approx 32%.

yardstick 3y ago
You forgot the additional 13% in employers NI. Edit: which yes takes it to 43% not the 45% I originally wrote. Now enjoy paying another 20% VAT on any goods and services
- consilient 3y ago
  > You forgot the additional 13% in employers NI. Only the part of that that would actually be passed through to you as salary in the absence of the tax could reasonably be considered part of your tax burden. Hard to say how much that is without any information about your field or employer, but I guarantee it's less than 100%.

vidarh 3y ago

Even when considering total tax wedge, which is not what most people consider "their" tax (note total deductions from your contracted salary is 38% at 120k salary; the total cost to your employer is ~136k because of the employer contributions), only a tiny minority pays that much. E.g. 120k places you in top 2% or thereabout. The average UK salary is <35k GBP. At that level total deductions are 20%, and your employer pays 10% employer NI.