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Topic: 40% tax for people who makes over £50k ?  (Read 557 times)

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40% tax for people who makes over £50k ?
« on: November 01, 2019, 11:59:02 AM »

Hi People

I want to know your feelings/stance about very high tax rate in UK

Any thoughts would help me putting this fact into different perspective


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Re: 40% tax for people who makes over £50k ?
« Reply #1 on: November 01, 2019, 12:12:38 PM »
Hi People

I want to know your feelings/stance about very high tax rate in UK

Any thoughts would help me putting this fact into different perspective

It's not as bad as it sounds, you only pay the higher rate of tax on money over the limits of the different bands. Also, there is a personal allowance on the first (currently) £12,500 on which no tax is paid.


But yeah, I don't expect anyone is delighted to pay 40% tax and above at any time.

Quote
.
Band   Taxable income   Tax rate
Personal Allowance   Up to £12,500   0%
Basic rate   £12,501 to £50,000   20%
Higher rate   £50,001 to £150,000   40%
Additional rate   over £150,000   45%

https://www.gov.uk/income-tax-rates
March 28th 2013-Moved to UK, husband on spouse visa.Oct 20th 2015-Applied by mail for FLR(M).Feb 1st 2016 FLR(M).March 7th 2018 ILR. YAY! March 21st NCS&JCAP appointment.


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Re: 40% tax for people who makes over £50k ?
« Reply #2 on: November 01, 2019, 01:34:52 PM »
It's a bit different in Scotland.

Quote
Band   Taxable income   Scottish tax rate
Personal Allowance   Up to £12,500   0%
Starter rate   £12,501 to £14,549   19%
Basic rate   £14,550 to £24,944   20%
Intermediate rate   £24,945 to £43,430   21%
Higher rate   £43,431 to £150,000   41%
Top rate   over £150,000   46%

https://www.gov.uk/scottish-income-tax
March 28th 2013-Moved to UK, husband on spouse visa.Oct 20th 2015-Applied by mail for FLR(M).Feb 1st 2016 FLR(M).March 7th 2018 ILR. YAY! March 21st NCS&JCAP appointment.


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Re: 40% tax for people who makes over £50k ?
« Reply #3 on: November 01, 2019, 01:35:25 PM »
It's not as bad as it sounds, you only pay the higher rate of tax on money over the limits of the different bands. Also, there is a personal allowance on the first (currently) £12,500 on which no tax is paid.


But yeah, I don't expect anyone is delighted to pay 40% tax and above at any time.

https://www.gov.uk/income-tax-rates

I agree.

It is also per person so if the income is shared between a couple (married or otherwise) then the tax burden can be halved.  Before we moved back to the UK I had more income than my wife because of pensions so I took my name off our joint accounts so we pay no tax on the dividends and interest in the UK as it is below her tax free allowance of £12,500

If you have dividends from shares of companies, or equity funds, then the first £2,000 is tax free followed by a tax rate of 7.5% if you are in the 20% band or 32.5% if you are in the 40% band.

If you sell shares or other property that produces capital gains then the first £12,000 of the capital gain is tax free followed by a tax rate of 20%

If you take distributions from a Roth then they are tax free in the UK. (Distributions from an IRA are taxed as regular income)
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Re: 40% tax for people who makes over £50k ?
« Reply #4 on: November 01, 2019, 01:48:35 PM »
Hi People

I want to know your feelings/stance about very high tax rate in UK

Any thoughts would help me putting this fact into different perspective

I have been retired for 10 years now and moved back 3 years ago with my wife to England but I still get the paperwork each year from my ex employer in the USA to sign up to or decline their health insurance plan so I know exactly what we would be paying in premiums and what our co-pays etc would be.

We also have to file a joint US tax return each year so I know exactly how much tax we would pay. (That tax is then zero'ed out by the foreign tax credits paid in the UK so we don't pay twice).  This means I know exactly how much tax we pay in the UK and how much we would be paying in the USA on the exact same income.  Our US taxes plus our US Health insurance premiums are higher than our UK taxes.  This past couple of years my wife has had cataract surgery in both eyes, I have had 3 suspicious moles incised and tested plus I have had treatment for a heart condition including surgery and none of that has cost a penny. Back in the USA we would have hit our $5,000 out of pocket max for each of 2 years plus co-pays on prescription drugs etc.
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Re: 40% tax for people who makes over £50k ?
« Reply #5 on: November 01, 2019, 05:09:23 PM »
Also worth mentioning, the majority of working people in the UK don't hit that tax bracket. But I definitely paid a lot more in healthcare expenses when I lived in the US so I'll happily pay taxes here.

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Re: 40% tax for people who makes over £50k ?
« Reply #6 on: November 01, 2019, 06:05:49 PM »
Also worth mentioning, the majority of working people in the UK don't hit that tax bracket. But I definitely paid a lot more in healthcare expenses when I lived in the US so I'll happily pay taxes here.

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Good point.

2 years ago 81.8% of taxpayers were paying at the 20% tax rate.

https://www.bbc.co.uk/news/business-40117521

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Re: 40% tax for people who makes over £50k ?
« Reply #7 on: November 03, 2019, 02:53:47 PM »
I have been retired for 10 years now and moved back 3 years ago with my wife to England but I still get the paperwork each year from my ex employer in the USA to sign up to or decline their health insurance plan so I know exactly what we would be paying in premiums and what our co-pays etc would be.

We also have to file a joint US tax return each year so I know exactly how much tax we would pay. (That tax is then zero'ed out by the foreign tax credits paid in the UK so we don't pay twice).  This means I know exactly how much tax we pay in the UK and how much we would be paying in the USA on the exact same income.  Our US taxes plus our US Health insurance premiums are higher than our UK taxes.  This past couple of years my wife has had cataract surgery in both eyes, I have had 3 suspicious moles incised and tested plus I have had treatment for a heart condition including surgery and none of that has cost a penny. Back in the USA we would have hit our $5,000 out of pocket max for each of 2 years plus co-pays on prescription drugs etc.

Hi Just a random thought,
Considering all this advantage of being in UK, why would some people choose to retire in U,S ?
It seems like there is no point ....


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Re: 40% tax for people who makes over £50k ?
« Reply #8 on: November 03, 2019, 03:54:53 PM »
Hi Just a random thought,
Considering all this advantage of being in UK, why would some people choose to retire in U,S ?
It seems like there is no point ....

Friends and family is the main reason we chose to retire to the UK, certainly not for financial reasons or the weather.  :D

A year after retiring we spent 6 months in a rented house in this same small town where we had lived in the 80's and where our children were born.  Once we knew that we wanted to move we then spent 5 years doing all the traveling we wanted to do in N. America while researching and planning for the move back. This site was of great value.

Turns out the finances are working out great for us, a very nice surprise indeed but where individuals choose to retire is a very personal decision based on many factors.  We loved our 29 years in the USA and I fully understand why people retire there.
« Last Edit: November 03, 2019, 03:57:35 PM by durhamlad »
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Re: 40% tax for people who makes over £50k ?
« Reply #9 on: November 04, 2019, 09:46:35 AM »
The taxes absolutely blow.  I had a guy in Accounts at work ask why I'm so cheap when he knows my salary.  I explained that after taxes and childcare, things aren't so rosey.  I think he was really surprised at how *not* far a high salary can go. 

Don't get me wrong, I'm not in the bread line.  But I do try to save where I can!


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Re: 40% tax for people who makes over £50k ?
« Reply #10 on: November 04, 2019, 02:32:11 PM »
I'm aware of my good fortune that my salary is higher than average, but how come everyone has a £40k car?  My car cost less than 5k cash and it was a significant purchase for me.

How do they afford it?


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Re: 40% tax for people who makes over £50k ?
« Reply #11 on: November 04, 2019, 03:14:21 PM »
I'm aware of my good fortune that my salary is higher than average, but how come everyone has a £40k car?  My car cost less than 5k cash and it was a significant purchase for me.

How do they afford it?

I used to have the M5.  Would have cost £90k+ to its first owner, but when I bought it (5 years old), it was less than £14k.  Cars drop in value SO FAST here, it allows people to get a lot of car for their money.

We always buy used.  Preferably 3-5 years old former fleet vehicles.  And we both get car allowances.  So there's that.  My husband used to have a company car, so he had a new car every 4 years.  Most of my friends have company cars.

What I will say is that 95% of the people you see driving the £40k cars are either:
1.  Company car
2.  A PCP purchase

A PCP loan allows people to have a fancy schmancy car that they do NOT own at the end of the term.  Basically a lease.  Allows people to live well beyond their means.

It annoys my husband beyond belief that I REFUSE a car loan and will only pay cash for cars.  He wants so bad to have something flash.  Too bad honey!


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Re: 40% tax for people who makes over £50k ?
« Reply #12 on: November 04, 2019, 03:46:11 PM »
I used to have the M5.  Would have cost £90k+ to its first owner, but when I bought it (5 years old), it was less than £14k.  Cars drop in value SO FAST here, it allows people to get a lot of car for their money.

We always buy used.  Preferably 3-5 years old former fleet vehicles.  And we both get car allowances.  So there's that.  My husband used to have a company car, so he had a new car every 4 years.  Most of my friends have company cars.

What I will say is that 95% of the people you see driving the £40k cars are either:
1.  Company car
2.  A PCP purchase

A PCP loan allows people to have a fancy schmancy car that they do NOT own at the end of the term.  Basically a lease.  Allows people to live well beyond their means.

It annoys my husband beyond belief that I REFUSE a car loan and will only pay cash for cars.  He wants so bad to have something flash.  Too bad honey!

Stick to your guns about buying cars for cash. Continue to tell your husband to suck it up.

Once nice thing about being in the 40% bracket while working is that by saving in a retirement scheme at work or a SIPP is that the deferred taxes are much higher.
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Re: 40% tax for people who makes over £50k ?
« Reply #13 on: November 04, 2019, 05:03:51 PM »
Stick to your guns about buying cars for cash. Continue to tell your husband to suck it up.

Once nice thing about being in the 40% bracket while working is that by saving in a retirement scheme at work or a SIPP is that the deferred taxes are much higher.

Oh, I work in finance full time.  My husband doesn't stand a chance with me.  Luckily we agree 100% on most everything financial.  It's just he's had his car for almost 4 years so he thinks it's time for a new one.  This is his first "non-company-car" he's had so he is itching for a new one.  I got out my tiny violin for him.

And his company does a 10% match for pension contributions.  He's been there 16 years.  It's AWESOME.  ;D


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Re: 40% tax for people who makes over £50k ?
« Reply #14 on: November 04, 2019, 06:52:25 PM »
The taxes absolutely blow.  I had a guy in Accounts at work ask why I'm so cheap when he knows my salary.  I explained that after taxes and childcare, things aren't so rosey.  I think he was really surprised at how *not* far a high salary can go. 

Don't get me wrong, I'm not in the bread line.  But I do try to save where I can!
Your childcare cost a month are more than what I make in 2 months.

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