Posts tagged "HICBC"
Toy pram filled with and surrounded by British banknotes on grass: A miniature blue toy pram with red trim, red wheels, and three embossed golden pound symbols (£££) sits on a sunny green lawn. The pram is filled to overflowing with UK polymer banknotes featuring Queen Elizabeth II, with numerous other banknotes scattered across the grass around it.
6 June 2024 Analysis

The Tories’ accidental 70% tax on people earning £120k

The Conservative Party has just proposed moving the point at which child benefit is phased out from income of £60k to £120k. This will greatly reduce the marginal rate for parents earning £60-80k. But it means that a parent earning £120k who has three children will face a 70% marginal rate. And they’ll face a […]
Line chart showing UK marginal tax rates by gross salary for a single earner with three children: Marginal tax rates peak at 71% on earnings between £50,000 and £60,000, and reach a second peak of 62% between £100,000 and £125,000, both significantly exceeding the 47% marginal rate on earnings above £125,000. Title: UK marginal tax rate for single earner, family of 3 kids Y-axis: Marginal tax rate on next £ (IT, employee NICs and child benefit charge) (0% to 80%) X-axis: Gross salary (single earner in household with three children) (£0 to £180,000) Logo: TAX POLICY ASSOCIATES Data points (gross salary ranges and approximate marginal tax rates): £0 to ~£12,570: 0% ~£12,570 to ~£50,270: 32% ~£50,270 to £60,000: 71% £60,000 to £100,000: 42% £100,000 to ~£125,140: 62% ~£125,140 to £180,000+: 47%
20 November 2023 Analysis

What’s worse than a 71% marginal tax rate? Penalising 19,000 people who don’t understand it.

The UK’s high marginal tax rates on people earning £50k are a disincentive to work. They’re made worse by the way a large chunk of the tax is collected – the “high income child benefit charge” (HICBC). The HICBC creates a “tax trap” for employees who usually wouldn’t file a tax return. If they earn […]

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