Earnings and taxes

When discussing taxes on income lobbyists invariably refer to the marginal rate of tax for high earners implying that this is a significant level of taxation.  But the correct figure to use is the total tax paid as a share of total income.  This gives a more realistic number. 

 

Data on earnings and tax and National Insurance paid can be derived from the PayPrecisePremium UK Salary Tool.  This allows for a comparison of different levels of earnings. It does of course not allow for earnings from non-employment such as rents, investments or interest.

 

Someone on the average earnings of £39,039  would pay £7,400 in tax and NI leaving £31,600 (81% of total earnings).  Someone on £100,000 would still end up with £68,557 (68%) of their income over twice as much as someone on an average income.

 

 The table sets out earnings levels with tax and NI paid and net income.

Income\	Income		Income
Gross	Net	Tax NI	Net	Tax NI
£	£	£	%	%
15000	14320	680	95.5	4.5
20000	17920	2080	89.6	10.4
25000	21520	3480	86.1	13.9
30000	25120	4880	83.7	16.3
35000	28720	6280	82.1	17.9
40000	32320	7680	80.8	19.2
45000	35920	9080	79.8	20.2
50000	39520	10480	79.0	21.0
55000	42457	12543	77.2	22.8
60000	45357	14643	75.6	24.4
65000	48257	16743	74.2	25.8
70000	51157	18843	73.1	26.9
75000	54057	20943	72.1	27.9
80000	56957	23043	71.2	28.8
85000	59857	25143	70.4	29.6
90000	62757	27243	69.7	30.3
95000	65657	29343	69.1	30.9
100000	68557	31443	68.6	31.4
105000	70457	34543	67.1	32.9
110000	72357	37643	65.8	34.2

 

Notes

The calculations exclude any other contributions such as student loan repayments.

 

 Conclusion

Taxes on earnings are generally progressive yet the exclusion of non-employment income and a lower rate of 2% on earnings above £50,284, result in a less progressive system than could be the case.

 

Sources

PayPrecisePremium UK Salary Tools.

https://payprecision.co.uk/take-home-100k/