ISSUE NO. 29 · FRIDAY 11 SEPTEMBER 2026

A 60 per cent tax rate that only exists between £100,000 and £125,000, a department store £124m in the red, and a tourist tax that would cost the Treasury £688m

About 12,000 parents are now holding their income below £100,000 on purpose. Four years ago it was roughly 1,100. They are not avoiding tax — they are avoiding a cliff-edge, because crossing £100,000 ends free childcare outright while the personal allowance is being withdrawn at the same time. The combined effect is a 60 per cent marginal rate, higher than the one paid by someone on £200,000.

The same shape turns up twice more today. John Lewis lost £124m in six months and named employer national insurance among the costs that got it there, while the grocer holding the group up made less money selling more. And the tourist tax being handed to England’s mayors would, on the only published modelling, cost the Treasury £688m in receipts it currently collects.

Below in full: the worst tax rate in Britain and how cheap it would be to fix, a department store carrying a cost base it did not choose, and a levy that raises money locally by losing more nationally. After those, the numbers, the diary, and one calculator worth five minutes.

Lead

Nearly 12,000 parents are capping their own pay below £100,000. In 2022 about 1,100 were.

Centax put that number on a problem everyone already knew about. Cross £100,000 and the 30 hours a week of funded nursery care for under-fives disappears — not tapered, gone — on a scheme that costs the government nearly £5bn a year. Sitting on top of it is the older mechanism: between £100,000 and £125,000 the £12,570 personal allowance is clawed back at £1 for every £2 earned, producing an effective rate of 60 per cent. Add student loan repayments and it gets worse again. The enforcement is loose enough to be its own story — a third of parents earning between £100,000 and £120,000 claimed and received the childcare anyway, because the test runs on what a household forecasts its income will be rather than what it turns out to be. And the repairs are already costed: raising the childcare threshold to £111,000 would cost the Treasury nothing extra, and scrapping it altogether about £640m in 2030, against the £5bn the scheme already runs at. This is not three policies failing. It is three landing on the same payslip in the same month. Read the full story →

The Numbers

No index card today — the market capture could not reach its data source this morning, and the rule here is that a close nobody could confirm does not get printed. It will be back on Monday. Bank Rate is 3.75% with six days to the 17 September decision, and CPI is still July’s 2.9% until Wednesday. The two cards on the right come from this week’s reporting rather than a feed.

More News

Waitrose made £103m in six months. The partnership that owns it still lost £124m.

That gap is the entire result. Group sales grew two per cent to £6.3bn and the pre-tax loss widened 41 per cent, which is a particular kind of problem: busier tills, deeper hole. The department store is where it sits — sales down two per cent to £2bn as shoppers stopped replacing big-ticket items, and the adjusted operating loss out to £83m from £53m. Waitrose lifted sales four per cent to £4.3bn, put £20m into cutting prices and still watched operating profit fall six per cent. Chairman Jason Tarry pointed at transformation spending, a harder trading environment and the increased cost of doing business; the group named the employer national insurance rise among them. Peter Ruis has gone, Will Kernan arrives from New Look, and most of the year’s profit is expected in the second half — which puts a great deal of weight on Christmas. Employee ownership buys patience. It does not buy immunity. Read the full story →

A tax meant to raise money for English cities would cost the Treasury £688m.

Angela Rayner put the overnight visitor levy to England’s mayors, charged as a percentage of the accommodation bill rather than a flat fee and, following the Scottish model, with no upper limit on the rate. Oxford Economics modelled three versions for UK Hospitality and every one came back negative: on a five per cent levy, 33,000 jobs gone by 2030 and a £1.8bn drop in tourism spending, with £688m of tax receipts that simply stop arriving because fewer people book. Burnham has charged visitors before — Manchester’s City Visitor Charge added £1 per room per night from April 2023 — but a flat pound is not an open-ended percentage. The design is what does the damage: the mayor who levies it books the revenue, and the Treasury that loses the receipts is somebody else’s problem. None of which makes the case wrong. Seaside towns and northern cities carry real costs from visitors and raise almost nothing from them. It just means this is a transfer, not free money. Read the full story →

The Brief

• Pre-Budget Submissions Are a Cry for Breathing Space — the B5 want part of the £25bn employer NI rise undone — and the Chambers of Commerce broke ranks to go after the triple lock.

On the Diary

• Today — nothing scheduled. The ONS calendar is genuinely empty, and so is the PMI one. A quiet end to the week.
• Monday — nothing scheduled. The first release of the new week does not land until Tuesday.
• Then it arrives all at once. Tuesday 15th, 7.00am — UK Labour Market, September. Wednesday 16th, 7.00am — consumer price inflation for August, the first move on that 2.9%. Thursday 17th — the MPC decision on Bank Rate. Three days that will decide rather more than the fortnight behind them.

The Toolbox

One tool from the site each issue, picked to fit what has just happened. Free, no sign-up, and it shows its workings.

Salary sacrifice vs standard pension calculator

“The 60 per cent band runs from £100,000 to £125,000, and the childcare cliff sits at the bottom of it. Pension contributions come off before adjusted net income is struck, which makes this the one lever most households at that line actually have. Worth knowing what it does to the figure before the Budget decides whether the line moves.”

The Close

Three taxes today, and the same fault running through all of them. A childcare threshold that hands a household everything on one side of a line and nothing a pound past it, so 12,000 parents have arranged their working lives around not crossing it. An employer national insurance rise that turns up in a department store’s accounts as part of a £124m loss. And a visitor levy that would raise money for mayors while costing the Treasury £688m of receipts it already has. None of these was designed to do harm. Each one was designed in isolation, and the damage shows up somewhere the designer was not looking — on a payslip, in a set of half-year results, in a national account nobody local has to sign. The Budget on 28 October is the moment all three arrive on the same desk. Centax has already priced the first repair at £640m. The question is whether anyone is adding up the other two.

If something here is wrong, or there is something you want dug into, just reply. It comes straight to me.

MJB