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It is a stupid hidden tax thing. They don't tax the first 12.5K of income, if it is below 100K. They start reducing that 12.5K limit as your income goes up, for
by actuator 2y ago
It is a stupid hidden tax thing. They don't tax the first 12.5K of income, if it is below 100K. They start reducing that 12.5K limit as your income goes up, for every £2, it reduces by £1.
So, if you earn 100K, the first 12.5K of your income is not taxable
If you earn 105K, the first 10K is not taxable
If you earn 125K, there is no non taxable amount.
So the tax rate gets applied two times, that's why the strange thing between 100K and 125K happens
- BrandoElFollito 2y agoWhoa, and I thought that our French taxes were complicated. At least it is always more taxes:)
- shubb 2y agoIt also effects your eligibility for free pre-school child care, which is worth £9000 /year to effected people. As you are paying 50% ni and income tax from 80 to 100, you are better off earning 80k than 100k. You can get around this with salary sacrifice pension, which can push your pre tax income down bellow the critical levels. But most employers refuse to offer it. At a small company, you might be able to make them do it.
- ManchesterDev 2y agoYeah completely forgot about this angle too. Losing 780 hours per year of free child care per child really racks up. You get significantly punished for breaching that 100k. So if you’re going to tip over, you needs to smash through it.