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Easyjet pilot in The Guardian (re: pay)

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Easyjet pilot in The Guardian (re: pay)

Old 16th Feb 2023, 12:44
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Originally Posted by Midnight Cruiser
The absurd unfairness is that it drops back down to 45% above £125k.
Before we continue tearing strips off each other about pay, surely this is the nub of the issue, the “hump” one encounters between 100-125k; the point of a progressive tax system is that as you go up the income bands you consistently pay more tax, and the 62% is an aberration that exists as a result of a less than joined up tax policy. To me, retention of the tax free allowance but introduction of a 50% tax bracket would be a far more transparent and consistent system, but that’s a political debate that isn’t really for here.

If it were completely up to me I’d advocate taxing Centrica at the moment.
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Old 16th Feb 2023, 13:08
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You'd imagine that quite a few MPs are encountering the 62% bracket, but yet it doesn't get smoothed out in the way it would with a progressive system. Oh silly me, of course MPs aren't normal tax paying people ;-)
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Old 17th Feb 2023, 07:15
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What is the collective wisdom to avoid the tax trap?

Must admit it’s snuck up on me this year, first time earning £100K+.

Is it as simple as thus:

Earn £110K Gross…

…Overpay pension by £10,100, “taxable income” becomes £99,900.

Fill in a tax return to be relieved circa £6K in income tax?

Therefore disposable cash reduced in theory by approx £4K, but my pension has £10K extra and I’ve given considerably less to HMRC…?
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Old 17th Feb 2023, 14:57
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Originally Posted by maxdiscretion
What is the collective wisdom to avoid the tax trap?

Must admit it’s snuck up on me this year, first time earning £100K+.

Is it as simple as thus:

Earn £110K Gross…

…Overpay pension by £10,100, “taxable income” becomes £99,900.

Fill in a tax return to be relieved circa £6K in income tax?

Therefore disposable cash reduced in theory by approx £4K, but my pension has £10K extra and I’ve given considerably less to HMRC…?
Basically yes, or if your pension contributions are salary sacrifice (ie before tax) then your gross becomes lower in the first place
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Old 18th Feb 2023, 13:22
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You could also lower your gross by things like buying a bike on a ride to work scheme or even now an electric vehicle, or look at some unpaid leave to get back under the £100k.
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Old 18th Feb 2023, 13:52
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Hardly encourages aspiration though does it? Where did it all go wrong?
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Old 18th Feb 2023, 15:44
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Originally Posted by maxdiscretion
What is the collective wisdom to avoid the tax trap?

Must admit it’s snuck up on me this year, first time earning £100K+.

Is it as simple as thus:

Earn £110K Gross…

…Overpay pension by £10,100, “taxable income” becomes £99,900.

Fill in a tax return to be relieved circa £6K in income tax?

Therefore disposable cash reduced in theory by approx £4K, but my pension has £10K extra and I’ve given considerably less to HMRC…?
You're doing something seriously wrong if your pension only benefits £10K when you put £10K into it. You should be claiming tax relief so with employer's NI contribution refund added your £10K becomes more like £15K.
No-one should be missing the opportunity to get the government to add up to 50% to their savings!
​​​​
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Old 18th Feb 2023, 17:54
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Originally Posted by meleagertoo
You're doing something seriously wrong if your pension only benefits £10K when you put £10K into it. You should be claiming tax relief so with employer's NI contribution refund added your £10K becomes more like £15K.
No-one should be missing the opportunity to get the government to add up to 50% to their savings!
​​​​
Backwards reasoning (but the correct conclusion)!
If you put £10k into your pension, don't give the government credit for gifting you money - they don't - it was your money, - it's just that you don't have to pay tax on it. In practice, if you pay into a SIPP from cash you've earned (ie already paid tax on), it's gets a basic rate tax refund top up within a couple of weeks, and then you'll get the higher rate refund (on the tax you've already paid) by doing an end of year tax return. Plus of course, the employer will contribute to a company pension - but all the same, there's no government contribution - all you're getting is a waiver from tax. The company can credit you with the saved employer NI, but usually they pocket that amount. How long the government give full tax relief on pension contributions remains open to speculation.
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Old 18th Feb 2023, 19:10
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Looking at it, wouldn't it make sense for an employer to offer a DB scheme with fairly high employee contributions in return for a salary freeze for a couple of years? It dumps quite a bit of risk on the airline but it'd be a great way to retain flight crew.

​​​​​​For those in the LHS with childcare requirements, surely part-time is currently a no-brainer.
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Old 10th Mar 2023, 14:06
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Originally Posted by FlightDetent
Overall, the core&trunk of the global pilot pool lives nowhere near the pleasant and enviable life settings you have. Such as owning a prime property, not needing to provide for the family, and not having the PIC responsibility on the job.

Please share more on how aviation works well for the smart and successful. What you are missing is that the rest of us are neither.
Owning a prime property?
Think you got wires crossed. Living in a flat is hardly prime property. Unfortunate family circumstances allowed us to receive an inheritance far earlier than I was expecting. Without that we wouldn’t have had a deposit for a property.

Of course I provide for family. My partner earns a tad more than me but I certainly not enough to have a single earning household.


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Old 14th Mar 2023, 12:00
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Possibly this is being resolved tomorrow?
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Old 15th Mar 2023, 07:31
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Originally Posted by hargreaves99
https://www.theguardian.com/business...ays-uk-economy

interesting.

EasyJet pilot McKenzie, a father of three, has similar plans: he will soon trade his full-time contract for a part-time one and flip properties on the side.

“I’m a captain, and the only reason I’m still working full-time is because my pension pot is small, due to time abroad. I currently contribute the maximum £40,000 to my pension, but in a few years I’ll absolutely go part-time, like a significant number of my colleagues already have, to avoid paying an effective tax rate of 62% [including 2% national insurance, on income between £100,000 and £125,140 due to the loss of the personal tax-free allowance].

“It’s just not worth it to wake up every day at 3am to work in the job I trained for: I’ll have the same take-home pay as I do now – £5,000 a month – by going part-time and reducing my pension contributions.
The way it sounds to me is that you lose your personal allowance at a rate of £1 for every extra £2 over £100.000. If you make £110.000 you you PA goes down to £7.570, and you pay 20% over (£50.270 - £7.570) + 40% over (£110.000 - 50.270). I don't think the other income tax bands change, just the PA becomes smaller, so the amount taxed at 20% becomes larger by £1 for every £2 raise, and the amount taxed at 40% becomes larger by £1 for every £1 raise, above £100.000. That would make it a 50% marginal (not effective, because it is only for the increase in pay...) tax rate. The effective rate for £110.000 would be around 30%.
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Old 15th Mar 2023, 08:59
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Monthly pay increase £945

Monthly pay increase £612 Effective tax is 60%

After £120k monthly take home goes up a bit more.
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Old 16th Mar 2023, 04:26
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Originally Posted by AIMINGHIGH123
Monthly pay increase £945

Monthly pay increase £612 Effective tax is 60%

After £120k monthly take home goes up a bit more.
I was wrong, guess your government does double dip. Finally found it on the UK.GOV website. Losing some, or all the personal allowance also brings down the amount where the higher rate of 40% starts by that amount. And it does make the marginal rate 60% between £100.000 and £125.000. Crazy.
Effective rate for £120.000 is £40.460 (total tax) / £120.000 (total income) = 34%.
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Old 16th Mar 2023, 04:29
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And there's the 2% NI on top, so effective tax rate is 62%.
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Old 16th Mar 2023, 04:32
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Originally Posted by FlyingStone
And there's the 2% NI on top, so effective tax rate is 62%.
please look up the definition of effective vs marginal rate.
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Old 16th Mar 2023, 07:09
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Correct - the term is marginal.

The effect of very high marginal rates and fiscal drag, is that people reduce their productivity as they get pushed into this 62% band.
Net effect; so crewing want a day off worked for the DO payment - no thanks, ⅔ of it goes to Hunt, so what's the point. Or in my case, ten years of being pestered to become a desperately needed LTC - but again why work much harder to have little to show for it in the pay packet. At the macro scale, GDP suffers.

Plus the government lose rather than gain revenue on pay over£100k, because all of it goes into a pension. (At least now, the £40k contribution limit is gone, so maybe I will do training. Retirement is looking pretty sweet!)
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Old 16th Mar 2023, 08:08
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I see the next (probable) government have vowed to reinstate the lifetime allowance but it’s fine if you’re a doctor (or judge), discuss.
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Old 16th Mar 2023, 11:56
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Originally Posted by nappychanger
I see the next (probable) government have vowed to reinstate the lifetime allowance but it’s fine if you’re a doctor (or judge), discuss.
is there grounds for a legal challenge there?!
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Old 16th Mar 2023, 12:37
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Originally Posted by santacruz
is there grounds for a legal challenge there?!
You would hope so, If you’ve worked hard and saved hard to put yourself in that position then planning for retirement is guess work presently.
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