Tax rates

[jp5]

And everyone that has replied to my post seems to have missed the first sentence. Up the basic wage to a decent living wage... a prime example of how people often only focus on their particular viewpoint when considering someone else's opinion...

It's well known that a major increase in minimum wage would result in much more unemployment.

 

[CheltenhamHacker]

It's well known that a major increase in minimum wage would result in much more unemployment.

Is it? (genuine question). Where is this from?

 

[USER1999]

I wasn't specificatly referring to the tax you pay when you put money in/out of a pension fund , what I was referring to was the tax relief you can get on let's say 10k for example , you can claim back up to 4k , so effectualy you put in 6k and the government put in 4k, so yes very unfair on people earning less imo.

But you can't look at it while ignoring the tax you will pay on it later. That's why you get tax relief on what you put in.

 

[jp5]

Is it? (genuine question). Where is this from?

You can read an enthralling report from the Low Pay Commission (an independent entity) that makes recommendations to the Government:
https://www.gov.uk/government/uploa...The_National_Minimum_Wage_LPC_Report_2014.pdf

I'll let you enjoy the details of the 300 page report, but essentially it boils down to finding a balance between a minimum wage that people can live on (though in certain areas of the country this has drifted out of touch) and a wage that employers can afford to pay.

In an ideal economy the minimum wage should be the living wage, but if it puts more people out of work that are then fully dependent on government subsidy (as opposed to partially on the NMW) then it's not going to improve matters.

 

[SwingsitlikeHogan]

Which you have neglected to reflect in your brackets!

So the correct figures (assuming the other 3 were correct) are...

£0-£10600 0%
£10601-£31785 20%
£31786-£150000 40%
£150001+ 45%

These sort of bands seem fine to me - the only issue being the values at which the bands start!

And, of course, the further 'tax' is National Insurance at around 12% for Employers and 13.8% for Employers (starting from £155 and dropping to 2% for Employees on income above £815 pw). and there are a couple of other 'tweaks' involved too!

NI has been a 'quiet killer' through which governments have squeezed even more out of both employees and employers. VAT, of course, is the other!

By my calculation (not guaranteed to be accurate, but based in those thresholds and rates) someone on a salary of 30600 is actually generating something around 9800 of payment to the government! 4000 Income Tax, 2700 EE NI and the Employer is paying a further 3100.

Those numbers nearly £13000 of income for the government, seems rather a large amount!!

And those figures don't include tax of profit by the compan, nor the VAT on expenditure o what hasn't been removed!!!

I am not that good on tax matters - but while the bands are correct I think it better and clearer to state it in reference to the individual's Personal Allowance (default PA is £10,600) otherwise the impression can be that the threshold between 20% and 40% is a fixed amount which it isn't. So for basic and higher

0 to PA: 0%
PA to PA+£31,785: 20% (this is for most paid up to £42,385)
PA+£31,785 to £150,000: 40% (this is for most £42,385-£150,000)

So for most tax at 40% is paid for that part of their earnings over £42,385.

If your PA is reduced to say £5,600 then you pay tax at 40% for that part of your earnings over £37,385

 

[Hobbit]

It's well known that a major increase in minimum wage would result in much more unemployment.

If treated in isolation... There are a number of mechanisms that would need to be adjusted to make it workable but the alternative is for a very poor basic wage to continue.

Do you prefer a very low basic wage for many?

 

[jp5]

If treated in isolation... There are a number of mechanisms that would need to be adjusted to make it workable but the alternative is for a very poor basic wage to continue.

Do you prefer a very low basic wage for many?

Of course not. But how would an increase in the base wage lead to anything other than fewer businesses being able to afford to pay it, and higher unemployment? Unless of course the businesses were subsidised by the Government.

 

[evahakool]

But you can't look at it while ignoring the tax you will pay on it later. That's why you get tax relief on what you put in.

As you probebly know you get a tax free lump sum when you take your pension so it's not all taxed .

But the question is paying a percentage of your tax at 40% fair, for me it is because the people lucky enough to be earning a higher wage can take advantage of the system. When a person on a lesser wage will not be able to do so as much.

 

[USER1999]

As you probebly know you get a tax free lump sum when you take your pension so it's not all taxed .

But the question is paying a percentage of your tax at 40% fair, for me it is because the people lucky enough to be earning a higher wage can take advantage of the system. When a person on a lesser wage will not be able to do so as much.

If you are still allowed to do this in 15 years time. I wouldn't count on it.

A million pounds pot will give an annuity of possibly as low as 27k per year. If you take out 25%, it will be a lot less.

Pensions are a huge rip off, unless you are public sector.

Under some predictions, earners over 170k might only get an annuity of 13k, regardless of how much they pay in.

Doesn't seem fair to me. Every one should be entitled to save adequately for their retirement.

Of course the truly rich don't pay tax at all.

 

[Foxholer]

As you probebly know you get a tax free lump sum when you take your pension so it's not all taxed .

But the question is paying a percentage of your tax at 40% fair, for me it is because the people lucky enough to be earning a higher wage can take advantage of the system. When a person on a lesser wage will not be able to do so as much.

You don't automatically get that lump sum, but you are entitled to it (up to 25% last time I looked - a long time ago)!

The result of taking the tax free lump sum is that the annuity/pension will be smaller - as the pot is only 75% of what it was.

Also, your logic about 'taking advantage of the system' is slightly awry. All levels are capable of 'taking advantage' of it, but the benefit for the 40% taxpayer is obviously more than that of the 25% one, whereas the costs are probably the same.

 

[Del_Boy]

Think bands is fair with the top band being 40%. Also think it is unfair to lose your PA the more you earn a double whammy for the government from those around those earnings.

On a separate note do you think voting should be loaded to the amount you put into the country coffers. Currently a person who takes out of the coffers has the same say as someone potentially paying in a shed load of cash.