45p Tax on high earners
 

What do people think about this? It's going up from 40% to 45% on high earners, and both main parties have pretty much signalled they'll go along with it.

My concern is that it's a completely political move by both sides. Labour have done it to make the Conservatives look like the party of the rich, and the Conservatives have done it to make themselves not look like the party of the rich.

It's nothing to do with actually raising more revenue to pay off debt, as it won't raise any additional. Increasing tax on the wealth creators means they're less likely to come and reside in this country, it means people have less aspiration to achieve top jobs, furthermore most economists believe it will bring in peanuts if anything, in fact a lot believe it will have the opposite effect and bring in LESS money for the government.

In the 1987 recession when income tax was taken from 45% to 40% the government actually saw more money coming in.

It's popular with the public according to a poll, but again this just adds to my cynicism, they're doing it because they'll get votes, not because its actually going to help. They take the easy option rather than explaining to the public that it really won't make a difference.

Re: 45p Tax on high earners
 

What is the criteria for high earners now? Has that line shifted?

Re: 45p Tax on high earners
 

Anybody who earns more than Gordon Brown:D

Re: 45p Tax on high earners
 

I believe it's above £150,000

Re: 45p Tax on high earners
 

Okey dokey
Thanks...
hahaha jaysay... hahaha

Re: 45p Tax on high earners
 

I don't understand how by raising the tax there won't be any extra. Can you please explain why?:confused:

Re: 45p Tax on high earners
 

Because it will of course go to pay MP's expenses Bernadette :D

Re: 45p Tax on high earners
 

Oh come on Churchman they have to live:D

Re: 45p Tax on high earners
 

cannot put a strong argument against that, though i would point out that it would reduce the immigrant intake.:rofl38::rofl38:

Re: 45p Tax on high earners
 

40% tax band starts a lot lower than 150K IIRC its ~38-40K

so unless they split it so that you have a band of 40 from 38 - 150 and 45 above that you are effectively increasing the tax on being successful in your career. what a brilliant way of encouraging people.

ETA: http://www.hmrc.gov.uk/rates/it.htm

Re: 45p Tax on high earners
 

Forget the 45% on "high earners" (is £40K so very high these days?). The whole system is unfair as it is.

Raise the personal allowance to at least £10,000 so that very low earners don't pay any tax; leave the 40% tax for those with taxable income over £40,000 but introduce a 50% band at above £100,000.

Re: 45p Tax on high earners
 

Am a bit thick on economics West Ender, understand tax within my earnings bands throughout the years, but do these high earners, who can afford good accountants, still find a way of 'hiding' their earnings to avoid paying tax ?

Re: 45p Tax on high earners
 

I wouldn't have thought £40k was a high earner, (would be very nice though !) especially when you look at the amount top footballers earn, some of them will be on £40k a week!:eek:

Re: 45p Tax on high earners
 

Some footballers are on 3 or 4 times that amount Linds!

Re: 45p Tax on high earners
 

Good accountants will always find loopholes and dodges to benefit their clients. There's only so far they can go, though, and good accountants don't usually go in for anything that isn't legitimate.

Re: 45p Tax on high earners
 

Andrew is right that reducing higher rate tax bands can actually increase tax revenues in certain economic circumstances (I seem to have a dim recollection of something called the Laffer Curve but I'm sure someone with a better grasp of economics will correct me!).

My priority for the budget would be to take lower income earners out of tax altogether which would help boost the economy, help the less well off and be a lot simpler than tax credits.

Re: 45p Tax on high earners
 

I know, it just pains me to think about it!:D

Re: 45p Tax on high earners
 

sadly i dont think it will infact the extra tax wil probably pay the benefits of even more imigrants :rolleyes:

Re: 45p Tax on high earners
 

I would have though by removing tax credits in such a way would actually save the Government and therefore us money.

Re: 45p Tax on high earners
 

I take it you wont be encouraged by the Government taking more money from you?


Basic rate: 20% £0-£37,400
Higher rate: 40% Over £37,400

Your tax already doubles then when you reach £37,400. An extra increase of 5% makes the gap even bigger. It does kind of make you not want to better yourself doesn't it?

I think the 40% band should be moved a lot higher than £37,400 if they are going to increase it to 45%.

Re: 45p Tax on high earners
 

Would having multiple levels that are watertight be better based on wht you earn? As it stands someone who earns shedloads with a good accountant will pay very little tax. It is not as though it is propotional to your income is it.

Re: 45p Tax on high earners
 

Its disgraceful. What about single parents?? You can have a two income household with both wage earners earning 25k, and paying the lower percentage tax. A single parent with just one wage to supportthefamily pays double tax with no tax credit support.

Why the hell do we encourage our kids to have a good education, work hard and furthertheir career when theyre to get penalised for it.

I work in sales and remember a good amount of time ago, deliberately stopping doing my job so I wouldnt getpushedinto the highertax bracket (with commission) and being worse off

Why should people work hard to better themselves and earnmore, only to be penalised.

Absolutely atrocious.

Re: 45p Tax on high earners
 

That's after deduction of your personal allowance of £6,475 (if you're under 65) so your gross earnings would be £43,875 before you're in the 40% band.

Re: 45p Tax on high earners
 

Understand all this, but what is Andrew talking about with a £150,000 tax band ? Is this where the new 45% is coming from or over the current (well, 2009/10) 'high earners' rate of over £37,400 ... :confused:

Re: 45p Tax on high earners
 

So you pay 20% on earning from £6,475 to £43,875 and then 40% on earnings over £43,875, is that correct?

Re: 45p Tax on high earners
 

HM Revenue & Customs: Rates and Allowances - Income Tax

There you go from the government itself ... the rates

Income Tax rates and taxable bands 2008-09 2009-10
Starting rate for savings: 10%* £0-£2,320 £0-£2,440
Basic rate: 20% £0-£34,800 £0-£37,400
Higher rate: 40% Over £34,800 Over £37,400

The link gives you all the details.

Re: 45p Tax on high earners
 

quoting andrewb... now were have I haeard that logic before?.. the same old kak Alan Walters the economic advisor to Thatcher was saying in the 80's.. if increase the tax on income of the rich they will all ****** off to the USA and leave us all alone.."the brain drain".... the fear the Tories try to put upon that if these people that have done very nicely out of the present difficulties will decide to jump ship if thier taxes are increased to help provide a more stable ecomomy....does anyone really care if the like of Andrew Lyyod Webber or Richard Bloody Branson ****** off?..the same old Tory attitude that we have to pamper the rich ... keep them happy and everything will be OK.. ;)

Re: 45p Tax on high earners
 

Nope, its definately 40% on anything over the 37K. :(

Brain drain - possibly but in teh worlds climate as it is there isn't many places where you are unlikely to get hit. The potential for tweaks only comes in for those outside the PAYE system. Self employed, business owners etc. then its all about how many things can be set against tax, wages to spouses as directors etc. I personally don't have an issue with playing teh game. teh rules are there and put there by very clever people. If there is a loophole then fair do's, use it to your advantage.

Re: 45p Tax on high earners
 

You're quite right, there are many legal ways of avoiding the taxes that most other people have to pay, who don't have the resources to find those loopholes.;)

New whistleblower claims over £1bn Barclays tax deals | Business | guardian.co.uk

Re: 45p Tax on high earners
 

Could not agree more!

It's economics not 'Alan Walter'. If you want to take your line, and punish the rich for creating wealth, do so. Your policy is to make the poor poorer just as long as we punish the rich.

Re: 45p Tax on high earners
 

err, Barclays hasn't yet asked for any money. It explored the deal so it could see if it was in shareholders best interest.

So Barclays employs better financial wizz's than the treasury. that sounds like good business sense to me(and not unheard of based on the fact that treasury wages are unlikely to be close to whats available in teh private sector in this sort of field).

So what you upset about. The fact that someone used the rules to their advantage? or was it simply a dig at Barclays for being successful again?

What is it about slagging off success? I've said it before, do you want to live in a country full of Losers? Would it make you feel better if all banks were financially ruined?

Re: 45p Tax on high earners
 

At the risk of going slightly off topic, that source of moral fibre, the Guardian, with their crusade on tax avoidance, do you know how much they pay themselves? ;)

Re: 45p Tax on high earners
 

Er...I made no comment on the story, other than it is all perfectly legal. I'm certainly not 'up set', just providing an example of how creative accountancy can result in paying less tax.

I don't know if you read many newspapers, but the story has been in all of them recently, including the Times, and that great, factually accurate publication the Daily Telegraph.

The banker, his socialite wife and the billion pound tax question - Times Online

Can Barclays avoid being nationalised? - Telegraph

Perhaps you should read a more varied selection of available media, thus ensuring a more accurate picture, so you don't jump to the wrong conclusions.;)

Re: 45p Tax on high earners
 

See post 33 for my answer to this.;)

Re: 45p Tax on high earners
 

Wish I was paying the highest rate of tax, I'd be a very happy bunny:D

Re: 45p Tax on high earners
 

Bearing in mind that Richard 'Bloody' Branson employs lots of people in this country, Virgin Atlantic, Trains, Megastores, Holidays, Credit card, Bank. Maybe it would be rather silly to let him ****** off somewhere else, as he would take his companies with him, and of course make thousands of people unemployed.