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BUSTED!
Here’s Matt Goodwin on X/Twitter:
At first glance, that sounds horrifying, doesn’t it?
But there’s just one problem: IT ISN’T TRUE.
The confusion comes from the difference between the marginal tax rate and the overall effective tax rate.
For income of more than £100,000, the UK tax system gradually withdraws the personal allowance, meaning every extra pound earned in that range is taxed heavily — effectively 62 per cent on the marginal pound.
That’s why you sometimes see headlines saying “you only keep £38 of every £100 earned”.
But that only applies to income of more than £100,000.
For the rest of their earnings — the vast majority of their £100k-plus salary — high earners pay normal rates: 20 per cent for basic rate income (£12,571 to £50,270) and 40 per cent for higher rate income (£50,271 to £99,999 – the stated amount is £125,140 but that doesn’t take account of the taper).
When you add it all up, someone on £100,000 actually keeps about £68,500, or roughly 68 per cent of their total earnings.
Even with the marginal 62 per cent bite kicking in, the overall effective tax rate is around 31–32 per cent, far from the 62 per cent the tweet implies.
So the reality is strikingly different from the headline claim: not only do high earners pay less than 40 per cent of their total income in tax, but they still take home a salary far above the minimum wage — often three times or more as much as someone on the National Living Wage.
The myth of the “38p per £1” is a classic example of how tax policy can be misrepresented by focusing on marginal rates without context.
Understanding the distinction between marginal and effective rates makes a huge difference.
So before anybody gets angry, relax: high earners aren’t being robbed blind.
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‘High earners only keep 38p of every pound’? Not quite!
Share this post:
BUSTED!
Here’s Matt Goodwin on X/Twitter:
At first glance, that sounds horrifying, doesn’t it?
But there’s just one problem: IT ISN’T TRUE.
The confusion comes from the difference between the marginal tax rate and the overall effective tax rate.
For income of more than £100,000, the UK tax system gradually withdraws the personal allowance, meaning every extra pound earned in that range is taxed heavily — effectively 62 per cent on the marginal pound.
That’s why you sometimes see headlines saying “you only keep £38 of every £100 earned”.
But that only applies to income of more than £100,000.
For the rest of their earnings — the vast majority of their £100k-plus salary — high earners pay normal rates: 20 per cent for basic rate income (£12,571 to £50,270) and 40 per cent for higher rate income (£50,271 to £99,999 – the stated amount is £125,140 but that doesn’t take account of the taper).
When you add it all up, someone on £100,000 actually keeps about £68,500, or roughly 68 per cent of their total earnings.
Even with the marginal 62 per cent bite kicking in, the overall effective tax rate is around 31–32 per cent, far from the 62 per cent the tweet implies.
So the reality is strikingly different from the headline claim: not only do high earners pay less than 40 per cent of their total income in tax, but they still take home a salary far above the minimum wage — often three times or more as much as someone on the National Living Wage.
The myth of the “38p per £1” is a classic example of how tax policy can be misrepresented by focusing on marginal rates without context.
Understanding the distinction between marginal and effective rates makes a huge difference.
So before anybody gets angry, relax: high earners aren’t being robbed blind.
Share this post:
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