This is an update to the charts I posted three years ago.
Tax + Employee's National Insurance:
The changes from three years ago are:
- The personal allowance has increased significantly, to £10,000. This has the side-effect of increasing the width of the trap at an income of £100,000, where the personal allowance rolls off. All the other income tax thresholds are unchanged (in cash terms) except that the 40% rate now starts a few hundred pounds earlier.
- The top ('additional') income tax rate has been reduced from 50% to 45%.
- The minimum income for NI contributions has not increased in line with the personal allowance, creating a kink at the left hand side of the Tax+NI chart.
I'll repeat what I wrote last time: In a rational world, we would abandon the artificial distinction between Income Tax and National Insurance. We would determine an appropriate shape for the marginal tax curve - preferably piecewise linear and non-decreasing. And we would apply a multiplier to that curve to raise what revenue the government deemed appropriate.