There’s an interesting blog posting in The Telegraph today, pointing out that on incomes between £100k and £113k the effective marginal tax rate is now 61.5%.
Note that this has nothing to do with the new 50% tax rate, which applies only to people earning more than £150k.
Instead it is the effect of three different measures being combined:
Combining the 40pc top rate of income tax with National Insurance at 11.5pc and the withdrawal of personal allowances above £100,000 has created a new marginal rate of tax of 61.5pc.
I hate this kind of peaks in the tax system that makes certain ranges of income unattractive.
If I was in charge, I’d introduce negative income tax instead.