The New Statesman
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£100k salary, feeling poor – is UK tax killing ambition? | Economics | The New Statesman
Posted
February 13, 2026
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February 13, 2026
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A listener paying 67% in tax asks if Labour are destroying UK productivity.
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From the new and improved New Statesman podcast studio, Anoosh Chakelian and Rachel Cunliffe answer listener questions.
A listener earning over £100,000 writes in to ask why the government is failing to address the "tax trap" that means high-earning parents are "penalised".
Ashley earns a little over £100,000 and says they are in the “tax trap”, paying an effective rate of 67%. They say they don’t mind paying the tax as it’s right high earners should pay more. But they now have a young child, and are looking into the free childcare offered by the government - which is not available to people earning over £100,000.
Ashley writes: “I would be better off earning £99,000 and thus gaining the free childcare hours (given how expensive nursery is, and how little of the money over £100k I keep after tax)”
They’re now looking to reduce their hours to dip below the threshold - and they say friends in a similar position are doing the same. And, yes, they acknowledge that £100,000 is a lot of money but say they live in a flat in London - not a “7 bedroom mansion” - and “there seems to be no allowance for the fact that London is an expensive place to live.”
The question is this:
“Why is the government just ignoring this issue in the tax and benefit system? The government ministers often mention we have a productivity issue, yet we have a tax system that is actively encouraging me to reduce my hours to be better off.”
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