Debate Magazine

Welcome to the New Basic Rate of Tax - It's 42%

Posted on the 08 September 2021 by Markwadsworth @Mark_Wadsworth

Employer has £100 to pay on wages.
New Secondary NIC rate = 13.8% + 1.25% = 15.05%. So the max. gross wage he can pay out = £100 ÷ 1.1505 = £86.92
New Primary NIC rate = 12% + 1.25% = 13.25%, add on official basic rate of tax 20% = 33.25%.
£86.92 less 33.25% = £58.02, an overall tax bill of £42 = 42%.
If you factor in VAT, which takes one-sixth of earnings in the productive economy, it's closer to 52% overall. It's far worse if you also have Student Loan Repayments or Working Tax Credits that are being clawed back.


Back to Featured Articles on Logo Paperblog