The graphs on this page show the tax rate applicable to each individual hour worked in a week. The first graph is based on the current minimum wage, the second on the proposed London Living Wage. The graphs assume the rate of pay and weekly hours remain constant throughout the year.

The graphs DO NOT take into account the effect of loss of other benefits such as council tax benefit and job seeker's allowance. For instance, someone might work 15 hours per week and still claim JSA, and their weekly income on minimum wage would be £88.95 + £67.50 = £156.45 pw. If they worked one extra hour a week the JSA would be replaced with WTC at £36.82 per week and they would be £25 a week worse off, not counting any reduction in council tax benefit or other allowances they might incur.

Of course everyone, even bank managers, have to get over the 73% 'tax bump'. It is a sacrifice that has to be made in order to earn more from longer hours or higher rates of pay. But whereas a bank manager on £200k a year spends about 15 minutes a day on the bump, someone on minimum wage spends 3½ days a week there. Prince Charles spends less than 30 seconds a day on the bump - it is out of the way before the first Royal Flush of the day.

 

 

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