How can you be poorer than people earning less than you? Thats not how progressive tax works. Am I misunderstanding something or is UK that messed up or something?
Not how progressive tax works, but it is the reality, e.g. in The Netherlands. Once you go over certain thresholds, you lose certain benefits leading to a poverty trap in some sense where the incentives of the system do not align with the implied goals of a healthy economy.
If you make over £100k, you lose your personal tax-free allowance. That means that your effective tax rate from £100k-£125,140 is 60%
That doesn’t in itself make you worse off than people making less than you, but when one parent makes over £100k, that’s the cut-off for receiving 30 hours of free childcare, as well as additional tax-free childcare up to £2000
So if you have small children with childcare needs, you can suddenly be worse off as soon as you or your partner hit £100k
One way to avoid both of these is to pay the additional money into your pension instead