Individuals in the UK are increasingly structuring their incomes to remain below £100,000 to avoid punitive tax rates. Once earnings exceed this threshold, individuals start paying 40% tax and lose their tax-free personal allowance, leading to an effective marginal tax rate of 60% until income reaches £125,140. This significant tax burden increasingly discourages high-earning professionals from striving for financial advancement, leading many to feel that increased earnings don't correlate with progress or satisfaction in their careers, impacting their overall decision-making and professional ambitions.
The UK tax system creates a disincentive for earning above £100,000, as individuals face a 40% tax and a loss of their personal allowance, leading to an effective marginal rate of 60% up to £125,140.
This tax threshold alters the perception of income, as many individuals find that beyond a certain point, working harder does not equate to more financial gain.
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