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    (Original post by Shashasheesh)
    You misunderstand how tax works...

    Everybody has a £10,000 personal allowance (income which is not taxed) - this will increase to £11,500 in 2017
    Then you pay 20% on the first 43,000 you earn (this will increase to 45k in 2017
    You ONLY pay 40% tax on anything above £43,000 after your 10k personal allowance

    So if someone earnt £100,000:
    100,000 - 10,000 PA = 90,000 taxable income
    90,000 - 43,000 = 47,000 to be taxed at higher rate

    The 47k will be taxed at 40%, the 43k is taxed at 20% and you pay nothing on the first 10k

    So...

    43,000 x 0.2 = 8,600 tax
    47,000 x 0.4 = 18,800 tax
    total tax = 27,400 for the year

    So excluding NI contributions your take home from 100k would be £72,600 not £65,467, that's a pretty big difference tbh

    YES this is a large reduction from 100k but you would really be absolutely fine living anywhere in the country (even London) on 72,600... IMO it's much preferable to earning 10k and taking home 10k...
    You fogot having to pay national insurance, that's like another £5000
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    (Original post by Trapz99)
    You fogot having to pay national insurance, that's like another £5000
    I said "excluding National Insurance"... the OP made no mention of National Insurance... I was just explaining the tax system because nobody else in this thread has actually broken down what you actually pay in tax and why
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    TSR Support Team
    (Original post by Shashasheesh)
    I said "excluding National Insurance"... the OP made no mention of National Insurance... I was just explaining the tax system because nobody else in this thread has actually broken down what you actually pay in tax and why
    He did

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    (Original post by Ladbants)
    Why should non-wealthy people only pay 20% then? It's just unfair to people who have worked hard.
    Because non-wealthy people may be literally unable to afford a house or food if a higher amount of tax is taken, whereas this cuts more into the leisure money of a higher earner. Otherwise poorer people would require more benefits just to make ends meet, which is counter-productive
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    Imagine you're about to buy your second house and then realise you have to pay 26k stamp duty for a 450k house :laugh:

    God kill me.
 
 
 
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